Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana

We examine how modern, polluting industries can affect agricultural productivity. The focus is on large‐scale gold mining in Ghana, which is capital‐intensive, releases environmental pollutants and is located near agricultural areas. Guided by a consumer–producer household framework, we estimate an agricultural production function and find that farmers located near mines experienced a relative reduction in total factor productivity of almost 40% between 1997 and 2005. We examine alternative mechanisms and find that pollution is the most plausible explanation for our results. This article highlights an important externality through which industries can affect living conditions in rural areas.