Small-scale mining and agriculture: Evidence from northwestern Tanzania

Abstract

The rapid expansion of small-scale mining (ASM) in sub-Saharan Africa has raised significant concerns about its impact on the local economy. While ASM has the potential to raise incomes and mobilize investments, ultimately benefiting existing agricultural activities and livelihoods, it may also have adverse effects on local farming communities. This paper examines the impact of small-scale gold mining on the agricultural production decisions of 965 rural households in northwestern Tanzania between 2008 and 2012. Contrary to the expectation of positive investment spillovers from ASM to smallholder agriculture, I find that farmer households tend to allocate fewer resources to agriculture and produce less output when small-scale gold mining sites emerge nearby. However, I also find suggestive evidence that exposure to small-scale gold mining leads to an increase in household consumption, while producing no evidence of adverse schooling or child health effects. This implies that small-scale mining can play an important role in alleviating rural poverty in the short- to medium-run.