Analyzing the Socio-economic Impacts of Mining with Propensity Score Matching (PSM): Insights for Responsible Mining in Caraga Region, Philippines

Abstract

Propensity-score matching (PSM) is an estimation procedure used in this study to address selection bias and endogeneity to obtain robust results in determining the impacts of mining on the socio-economic condition of the people in the mining areas of Caraga Region, Philippines. This study has used it with three matching methods (nearest neighbor, kernel and radius matching) to come up with implications on the socio-economic underpinnings of responsible mining for the region. The impacts of mining in this study are signified by the significance of average treatment effects on the treated (ATT) for each of the socio-economic parameters of the households under study. Consistently, the results demonstrate increased borrowing in the mining areas of the region.  Results of radius matching have indicated increase in investment for human capital buildup, as implied by the increase in food and education expenditures. There are also manifestations of in-migration and efforts on the part of mining to participate in the improvement of accessibility condition through the provision of paved roads. Yet, the results signify that there is yet a need to work for the improvement of the quality of life as perceived by the households in the mining areas.  This study has recommended intensified efforts towards human development, entrepreneurship and pollution control, especially that responsible mining is to build the resilience of people to natural hazards for sustainable development in Caraga Region, Philippines.

Keywords: propensity-score matching, nearest neighbor, kernel and radius matching, ATT