Economic valuation of artisanal small-scale gold mining impacts: A framework for value transfer application

Abstract

Illegal artisanal and small-scale gold mining (ASGM) activities have serious environmental and health consequences. In this study, we developed a framework for calculating the economic costs associated with the negative environmental and social impacts of ASGM in the Brazilian Amazon. Based on a literature review on impact valuations of deforestation, land degradation, and mercury contamination, we used multiple parameters to develop a generalizable value transfer formula. The formula relates input variables, such as mining site area, pit depth, gold extraction productivity, and other context variables (population density, per capita income, average daily fish consumption, and transportation cost for restoration) to calculate the average monetary values associated with the impact. Additionally, we propose an enhancement to the model used by Bakker et al. (2021) for estimating mercury impacts on human health. Our findings show that values associated with social and environmental damage range from US$ 187,200 to US$ 389,200 per kilogram of gold, which is mostly attributable to health outcomes related to mercury contamination, which represents more than twice the market value of gold. Furthermore, we conducted a case study for the Tapajós Basin, which revealed that the socioeconomic costs generated by 4,547 ha of alluvial ASGM in the basin surpasses US$ 1 billion for the year 2020.