The Brumadinho dam rupture disaster in Minas Gerais (Brazil) and the productivity: regional economic impacts using a computable general equilibrium approach

The aim of this paper is to analyse the impact of the Brumadinho dam rupture that occurred in Minas Gerais (Brazil) on labour productivity. As a typical case of negative externalities, this type of disaster leaves behind large-scale environmental and economic damages at both local and regional levels. To account for these, we translated the environmental effects into labour productivity changes in the affected area. It is assumed that changes in the payment of workers is proportional to the labour productivity, which captures the economic responses. Regional economic effects are modelled using the BMaria-MG, a computable general equilibrium (CGE) model calibrated with data of 2015. The analysis is performed to fill a gap found in the literature, given this is a topic currently in growing development. The results indicate a small impact on GDP in all regions. This is due to the low significance of labour productivity in the sectors. Since the study provides only a partial perspective of the productivity changes, disregarding for example the effects on capital productivity, results are limited. This is an improvement considered for the next phase of the research, which will disaggregate the input-output analysis in a more appropriate manner to better capture the related impacts for the most affected areas.