Estimating environmental and cultural/heritage damages of a tailings dam failure: The case of the Fundão dam in Brazil

Abstract

We present the results of a contingent valuation study aimed at estimating the monetary value of environmental and cultural/heritage injuries caused by the Fundão (tailings) Dam failure in Brazil in 2015 as perceived by the Brazilian population. While the valuation literature on mining-related externalities is considerable, valuation studies of environmental and cultural/heritage injuries resulting from mining incidents are scarce and most available damage assessments apply market valuation methods, while rarely considering environmental and other nonmarket-valued impacts. The flooding and the release of tailings from the Fundão Dam failure led to injuries to sediments, watercourse opacity, and oxygenation, changes in riparian morphology, damages to cultural/heritage resources, mortality to fish and wildlife, changes in the food chain and more along the 675 km watercourse of the Doce River. This was arguably the greatest environmental and cultural/heritage injury ever caused by a single tailings dam collapse. The study followed state-of-the-art recommendations for the development, administration, and data analysis of stated-preference valuation methods. The survey of a representative sample of 5195 Brazilian urban households revealed that the average lower-bound willingness-to-pay estimate to avoid a similar incident in the near future was 137 USD and the parametric-based estimate was 230 USD per household, which aggregates to 7.96 or 12.91 billion USD, respectively. This corresponds to environmental damages of 176 or 295 USD per m3 of tailings released.