A contingent valuation study of the environmental costs of mining in the Brazilian Amazon

Abstract

The Great Carajás Program in the Brazilian Amazon includes one of the world's largest iron ore mines and an 890‐kilometer railroad connecting the mine to the sea. At the time the mine was developed in the early 1980s, the benefits from the project were simply assumed to outweigh the costs, including the environmental damage. This article reports on a recent study using the contingent valuation method (CVM) that attempts to measure the use and nonuse value of the natural resources threatened by large‐scale mining in the Amazon as a whole and more specifically in Serra dos Carajás area. On the basis of a random survey of the population of Brasilia, it finds the average willingness to pay to avoid more large‐scale mining in the Amazon is R$ 5.90. The figure for the Serra dos Carajás area alone varies between R$ 3.90 and R$ 5.10. One of the first attempts to use CVM to assess the environmental costs of mining in the developing world, this study highlights a number of challenges encountered in carrying out CVM surveys where large segments of the population are low income and poorly educated. It finds that these problems can be overcome with appropriate modifications to the CVM techniques employed in developed countries.