Economic valuation of environmental and health impacts from mining: the case of Peru

The main objective of this paper is to elicit and assess rural communities’ nonmarket values of the effects of mining on their (1) health and (2) environment directly affecting their economic activities. This paper is one of very few to elicit preferences about mining in rural communities in a developing country, close to mines and exposed to mining externalities. Using stated preference methods, we find that to prevent the externalities from mining, the poorest individuals in our sample are willing to contribute average amounts equal to at least their average households’ weekly consumption expenditures. Our results are useful for stakeholders. First, this sector plays an essential role in the economy of many developing countries like Peru with little diversified economies. It is critical for these governments to ensure that mining activities are sustainable to avoid conflicts of many types and at various scales. Countries like Peru cannot risk missing out on the development benefits that well-governed mining can bring to them. Second, it is also urgent for mining companies to take care not only of their carbon and water footprint, but also their impacts on the environment and livelihoods in the regions where they operate, and their contribution to attain the Sustainable Development Goals (SDGs). These issues need to be of high priority for countries that are highly dependent on mining as their trading partners implement environmental regulations.