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The Impact of Government Disaster Surveillance and Alerts on Local Economic and Financial Conditions

Author

Listed:
  • Thiago Christiano Silva

    (Universidade Católica de Brasília
    Universidade de São Paulo)

  • Fabiano José Muniz

    (Universidade Católica de Brasília)

  • Benjamin Miranda Tabak

    (FGV/EPPG Escola de Políticas Públicas e Governo, Fundação Getúlio Vargas (School of Public Policy and Government, Getulio Vargas Foundation))

Abstract

This paper examines how government alerts about a potential dam rupture affect Brazilian municipalities’ local economic and financial conditions. The dam collapses in Mariana (2015) and Brumadinho (2019) revealed the extent of losses that environmental disasters can cause in terms of human lives, flora, and fauna. This paper investigates the effects of government alerts regarding dams’ structural vulnerability on nearby municipalities. We focus on municipalities with dams classified as structurally vulnerable but ended up not collapsing. This approach disentangles the actual economic effects of the dam rupture from the information value of the government alert. These notifications have a detrimental impact on municipalities’ local economic and financial conditions: local consumption declines, labor markets concentrate on less industrialized sectors, and financial development decreases. We also find that the government alerts diffuse to neighboring municipalities with a magnitude inversely proportional to the neighboring municipality’s distance to the notified dam. Our findings highlight the importance of incorporating negative externalities associated with potential environmental disasters into mining companies’ costs as a way to mitigate disasters.

Suggested Citation

  • Thiago Christiano Silva & Fabiano José Muniz & Benjamin Miranda Tabak, 2023. "The Impact of Government Disaster Surveillance and Alerts on Local Economic and Financial Conditions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(2), pages 559-591, February.
    • Handle: RePEc:kap:enreec:v:84:y:2023:i:2:d:10.1007_s10640-022-00736-4
    DOI: 10.1007/s10640-022-00736-4
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    Cited by:

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    More about this item

    Keywords

    Environmental risk; Mining disaster; Government alert; Surveillance; Spillover;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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