Evaluation of the medium-term economic impact for the municipalities affected by the disaster in Mariana, Minas Gerais

Abstract

In November 2015, the Fundão Dam, located in the municipality of Mariana, in Minas Gerais, Brazil, collapsed. This disaster took on enormous proportions and, in relation to the damage caused to the affected populations. To analyze the medium-term economic recovery (from 2016 to 2018) of the municipalities affected by the disaster, canonical and dynamic difference-in-difference models were estimated, for economic variables: municipal GDP; value of animal production; harvested area; production value of temporary and permanent crops. As a control group, all municipalities belonging to the states of Minas Gerais and Espírito Santo, which were not affected by the disaster, were used. The treatment group is formed by the municipalities directly and indirectly affected by the disaster. The main results pointed to losses in the affected municipalities about the value of animal production in the years 2016 and 2017 with a recovery already in 2018. The estimates with dynamic effects for the value of crop production also indicated losses in the municipalities achieved in 2016, however, a recovery trajectory can be observed from 2017 onwards, which extends to 2018.