Estimating environmental damages of a tailings dam failure: The case of the Fundão Dam in Brazil

Mikolaj Czajkowski, Norman Meade (nmeade322@gmail.com), Ronaldo Seroa da Motta (seroadamotta.ronaldo@gmail.com), Ramon Ortiz (ramon.arigoni.ortiz@gmail.com), Mike Welsh (5714mwelsh@gmail.com) and Gleiciane Blanc (gleiciane.carvalho@lactec.org.br)
Additional contact information
Norman Meade: Independent consultant
Ronaldo Seroa da Motta: State University of Rio de Janeiro (UERJ)
Mike Welsh: Independent consultant
Gleiciane Blanc: Lactec

No 2022-19, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: We present the results of a contingent valuation study aimed at estimating the monetary value of environmental and cultural/heritage injuries caused by the Fundão (tailings) Dam failure in Brazil in 2015 as perceived by the Brazilian population. While the valuation literature considering mining-related externalities is considerable, valuation studies of injuries resulting from mining incidents are scarce and most available damage assessments apply market valuation methods while rarely considering environmental and other nonmarket-valued impacts. The flooding and the release of tailings from the dam failure led to injuries to sediments, watercourse opacity, and oxygenation, changes in riparian morphology, loss of human life, mortality to fish and wildlife, changes in the food chain and more along the 675 km watercourse of the Doce River. This was arguably the greatest environmental and cultural/heritage injury ever caused by a single tailings dam collapse. The study followed state-of-the-art recommendations for the development, administration, and data analysis of stated-preference valuation methods. The survey of a representative sample of 5,195 Brazilian urban households revealed that the average lower-bound willingness-to-pay estimate to avoid a similar incident in the near future was 137 USD and the parametric-based estimate was 230 USD per household, which aggregates to 7.96 or 12.91 billion USD, respectively. This corresponds to environmental damages of 176 or 295 USD per m3 of tailings released.

Keywords: tailings dam failure; nonmarket environmental damages; contingent valuation; willingness to pay (search for similar items in EconPapers)
JEL-codes: Q20 Q30 Q51 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2022
New Economics Papers: this item is included in nep-agr, nep-dcm and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2022-19

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