Violence and Gold price shocks in the Brazilian Amazon: an exploratory analysis

Catharina BECKER MISSEL MACHADO

Master's thesis

The impact of climate change on conflicts in Brazil

Abstract:

The rise in international commodity prices following the 2008 global financial crisis sparked a gold stampede in the Brazilian economy, particularly in the Amazon region, one of the main goldrich zones in the country, making both legal and illicit mining a highly profitable and alluring business. It is believed that the increased illicit mining of gold has exacerbated violence in areas with abundant metals, becoming a new driving force in Brazilian conflicts. In this context, the present thesis is a preliminary investigation of the relationship between mining and conflict through an extensive microeconomic literature review and descriptive statistics on the gold surge's correlation and four different measures of violence, including homicide rate, firearm death rate, violent causalities, and aggregated rural violence. An entirely new dataset is created for Brazilian municipalities located in the Legal Amazon to determine those which are exposed to illegal mining and how they are affected by violence. To circumvent the paucity of data on illicit mining in Brazil, we use the location of protected areas, such as Indigenous Territories and Natural Conservation Areas, and deforestation rates as instruments to determine municipalities exposed to illegal mining. In protected areas, no mining of any kind is allowed, meaning that all mining activities in municipalities with these characteristics are illegal. We conclude by demonstrating that the municipalities exposed to illegal mining present 13.8% more incidences of homicide rate than municipalities exposed to legal mining and 63% more than municipalities not exposed to mining and that the violence indicators seem to be correlated with the international gold price.

Abstract:

The rise in international commodity prices following the 2008 global financial crisis sparked a gold stampede in the Brazilian economy, particularly in the Amazon region, one of the main goldrich zones in the country, making both legal and illicit mining a highly profitable and alluring business. It is believed that the increased illicit mining of gold has exacerbated violence in areas with abundant metals, becoming a new driving force in Brazilian conflicts. In this context, the present thesis is a preliminary investigation of the relationship between mining and conflict through an extensive microeconomic literature review and descriptive statistics on the gold surge's correlation and four different measures of violence, including homicide rate, firearm death rate, violent causalities, and aggregated rural violence. An entirely new dataset is created for Brazilian municipalities located in the Legal Amazon to determine those which are exposed to illegal mining and how they are affected by violence. To circumvent the paucity of data on illicit mining in Brazil, we use the location of protected areas, such as Indigenous Territories and Natural Conservation Areas, and deforestation rates as instruments to determine municipalities exposed to illegal mining. In protected areas, no mining of any kind is allowed, meaning that all mining activities in municipalities with these characteristics are illegal. We conclude by demonstrating that the municipalities exposed to illegal mining present 13.8% more incidences of homicide rate than municipalities exposed to legal mining and 63% more than municipalities not exposed to mining and that the violence indicators seem to be correlated with the international gold price.

Keywords

Amazon region, Illegal Gold mining, Violence, Gold price, Organized crime

Language used: Czech

Date on which the thesis was submitted / produced: 30. 6. 2023

Thesis defence

• Supervisor: prof. Pascale Combes Motel

Palacký University Olomouc

Faculty of Science

Master programme / field:
Global Development Policy / Global Development Policy