Exploring the economic promise and environmental costs of mining in Brazil

Despite its reputation as a catalyst for economic development, there is surprisingly little evidence on how mining affects local economies, or how those impacts balance against environmental costs. This question is particularly pressing in Brazil, a country that is both a global mining hub and home to some of the world’s most important ecosystems.

The study, published in Nature Communications by researchers from IIASA, the Vienna University of Economics and Business (WU), and the University of São Paulo, Brazil, compared the effects of large-scale industrial mining operations with informal small-scale, or garimpo, mining. While there are case studies on individual mines, this study took a nationwide view looking at over 5,000 municipalities, tracking the economic and environmental effects of mining over time and across neighboring areas. The authors combined satellite data with official economic statistics to get a full picture.

“Mining is frequently promoted by political and business leaders as a pathway to prosperity, but we found that the reality on the ground is much more complex and often disappointing,” explains lead author Sebastian Luckeneder, a researcher at the Institute for Ecological Economics at the Vienna University of Economics and Business (WU). “Our results show that in many cases, the economic boost is short-lived and comes at the cost of lasting environmental damage.”

While industrial mining is large-scale and operated by companies with heavy machinery and legal permits, garimpo mining is often unregulated or illegal, and especially prevalent in the Amazon region. The results show that garimpo mining is closely linked to deforestation, while industrial mining did not show a strong connection to forest loss. However, when it comes to economic outcomes, neither model delivered steady, long-term improvements.

“Although industrial mining sometimes brings short-term economic growth, these benefits often disappear within a few years. In some regions, we even observed signs of economic decline, both in mining areas and in neighboring municipalities,” says coauthor Juliana Siqueira-Gay from the University of São Paulo.

“We were surprised to see how quickly the economic benefits of industrial mining faded when global commodity prices dropped,” adds coauthor Victor Maus, a researcher in the Novel Data Ecosystems for Sustainability Research Group of the IIASA Advancing Systems Analysis Program. “Even neighboring regions showed signs of decline, which raises serious concerns about over-reliance on mining as a development strategy.”

The findings challenge the prevailing assumption that mining automatically boosts local economies.

“Our findings challenge the idea that mining is a reliable engine for local development,” notes Tamás Krisztin, another coauthor and senior research scholar in the Integrated Biosphere Futures Research Group of the IIASA Biodiversity and Natural Resources Program. “Economic benefits mainly occurred before 2010. Environmental costs, particularly from informal mining, were initially high, then temporarily eased, but have resurged in more recent years.”

The authors emphasize that how mining is managed makes a critical difference. They urge policymakers to bring informal mining under stricter legal regulation, enforce robust environmental and social safeguards, and closely monitor activities, especially in vulnerable ecosystems like the Amazon. In regions where responsible oversight is not possible, they suggest that mining should be restricted altogether.

“Mining will remain necessary for supplying raw materials, but we must stop treating it as a silver bullet for economic development. We need to prioritize resource efficiency, invest in recycling, and ensure mining only happens when it clearly serves the broader public good, economically, socially, and environmentally,” concludes IIASA Economic Frontiers Program Director, Michael Kuhn, who was also a study coauthor.

The study was partly conducted during the 2021 IIASA Young Scientists Summer Program (YSSP) as part of Luckeneder’s YSSP project.

Reference 
Luckeneder, S., Maus, V., Siqueira-Gay, J., Krisztin, T. & Kuhn, M. (2025). Forest loss and uncertain economic gains from industrial and garimpo mining in Brazilian municipalities. Nature Communications DOI: 10.1038/s41467-025-61930-8