The economic valuation of environmental damages in scenarios of tailings dams' ruptures: The case of Brumadinho's catastrophe, Minas Gerais, Brazil

Abstract

Qualifying and quantifying the value of environmental damages that have affected a particular region following a catastrophic event is not always an easy task, because some damages are perceived in the short-term and others can only manifest themselves after many years. Expressing the environmental damage through mathematical formulas is even more difficult to undertake, because some damages can be easily measured and others can be more complex to scale. When it comes to environmental damages caused by tailings dams bursts, the task of estimating their economic value becomes even more complicated considering the multiplicity of factors involved and the length of time they remain at the affected sites. Despite all these uncertainties, the allocation of a monetary compensation to those responsible for the damage is a public duty, so the development of credible and fair methodologies for the economic valuation of environmental damages is a mandatory challenge. With this in mind, in order to financially measure events that promote environmental degradation, we proposed the EVED methodology – Economic Valuation of Environmental Damages, inspired on the standard VERA – Economic valuation of environmental resources. The novelty of EVED is that it moves the focus from valuating the environment based on the classification of features' “use” or “no-use”, to valuating the environment based on the recovery and repair time scale. The tested site was the Ribeirão Ferro-Carvão watershed located in the municipality of Brumadinho, state of Minas Gerais, Brazil, which has been affected by the collapse of B1 tailings dam of Vale, S.A. mining company, in 2019. The valuation of environmental damages was restricted to the natural vegetation of Atlantic Forest biome impacted by the tailings' mudflow. The results revealed losses of ecosystem services amounting to R$ 163,641,289.5, and costs to repair (clean) the affected areas (valley and banks of Ribeirão Ferro-Carvão) amounting to R$ 571,346,957.9. These results increased previous estimates, but were considered more realistic since this study took into account the value of affected ecosystem services as well as the value of direct costs related to the removing of tailings from the affected sites, combined with the effect of time on these values, something that was not previously the case. It was therefore concluded that the EVED methodology provides a realistic framework for the financial amounts to be imputed to mining companies as monetary compensation related to the collapse of tailings dams. It should be noted that the study has valued the damage related to the impact of B1 dam collapse on the natural vegetation of Ribeirão Ferro-Carvão's channel and banks, meaning that it does not represent a comprehensive analysis of environmental damages caused by the disaster, which would naturally have to include damages related to the degradation of soil, air and water, among other compartments. It should also be said that the EVED methodology comprises a set of financial valuation tools designed to support judicial decisions, and does not address moral damages or life loss.