The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso

We use a quasi-natural experiment, the recent gold boom in Burkina Faso, to document the local wealth impact of private versus common property management. The net impact of privatizing the management of a natural resource on wealth is subject to theoretical debate. We measure household wealth through consumption and consider two modes of property management: artisanal and industrial mines. Artisanal mines are labor intensive and managed as a common property. Industrial mines are capital intensive and privatize the resource by enclosing their production area. We identify the impact of each mode of gold extraction by exploiting two sources of variation: changes in the gold price and the geological setting of Burkina Faso. We show that a 1% increase in the gold price increases consumption by 0.2% for households neighboring artisanal mines, while we do not find any effect for households neighboring industrial mines. Thus, while the privatization and industrialization of production increases efficiency, in accordance with much of the literature on the commons, the distributive consequences of each mode of property management are such that artisanal mines benefit more to the local communities.