New evidence of extensive damage to the environment, agriculture and living standards in Ghana
This news story was produced by the Royal Economic Society.
The expansion of large-scale gold mining in Ghana has led to a large reduction in agricultural productivity and output – and a significant increase in rural poverty. Environmental pollution from the mines – in the form of air pollutants and acid rain – is the most plausible cause of the damage to farmers’ livelihoods.
These are the central findings of research by Fernando Aragón and Juan Pablo Rud, which is forthcoming in the Economic Journal. Their analysis of data on farming households from the Ghana Living Standard Surveys shows that between 1997 and 2005 (a period in which national gold production grew by 160%), farmers within 20km of mines saw their agricultural productivity reduced by almost 40%.
This had a knock-on effect on farmers’ living standards, with rural poverty in mining areas increasing by 18%. In contrast, the rest of the country experienced a significant reduction in rural poverty over the same period.
The authors comment:
‘Our findings have important implications for public policy. First, they highlight the need to strengthen environmental policies that control emissions from modern mines, especially in developing countries.’
‘Second, they highlight an important cost that should be considered when assessing the net benefits of mining for communities in mining regions.’
The study notes that the increase in gold production in Ghana between 1997 and 2005 was driven both by the expansion of existing mines and the opening of new ones. These modern mines were mostly located in fertile lands, where traditional farming is the main source of people’s livelihoods.
Modern mines can pollute the air with exhausts from heavy machinery and processing plants and particulate matter from blasting. In larger concentrations, these pollutants can deposit on the ground in the form of acid rain and have long-term cumulative effects on soils and crops. This environmental damage can explain the observed negative effects on agriculture.
The authors examine this explanation by using satellite imagery and looking at levels of pollution around mines. Consistent with their interpretation, they find increased levels of nitrogen dioxide (NO2), an important air pollutant, in mining areas.
In contrast, alternative explanations for the fall in agricultural productivity and the rise in rural poverty – such as displacement of land and workers, or selective migration – are not supported by the data. For example, there are no noticeable changes in the socio-demographic composition of local populations or changes in local prices.
The findings of this research highlight a phenomenon that has been neglected in the policy debate on mining: the negative effect of mines on agriculture. This effect is especially relevant in areas where agriculture remains an important source of livelihood.
For example, the authors calculate that in Ghana, the loss of farmers’ income exceeds the amount paid by mining companies as taxes and royalties. Moreover, most of that money did not reach local communities but stayed in the capital city, Accra, which is 400km away.
Notes for editors
‘Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana’ by Fernando Aragón and Juan Pablo Rud is forthcoming in the Economic Journal. The paper is based on the IGC Ghana project ‘Gold mining and living standards in Ghanaian households’.