Raquel M. Balanay, Ph.D. Caraga State University Ampayon, Butuan City Jose M. Yorobe Jr., Ph.D. University of the Philippines-Los Baños College, Los

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1 Raquel M. Balanay, Ph.D. Caraga State University Ampayon, Butuan City Jose M. Yorobe Jr., Ph.D. University of the Philippines-Los Baños College, Los Baños, Laguna

2 Caraga Region is a mining destination in Mindanao, Philippines, which is located in the southern part of the country. Map of Caraga Region Surigao del Norte and Surigao del Sur are two provinces in Caraga Region, which are rich in nickel, iron, chromite, and gold. They host most of the registered firms in the region. In 2012, the mining sector of Caraga reported a revenue amount of over US$ 69 million or Php 3 billion (Pantaleon, 2013).

3 Resource Curse? Caraga Region, particularly in the Surigao Provinces, is rich in mineral deposits. Mining in the Surigao area had started in 1914 with a nickel mine and nickel refinery in Nonoc Island, Surigao del Norte. The region had been among the poorest in the country, with 51% of Surigao s total number of households considered poor in Poverty incidence among families is still high throughout the region at 31.9% in 2012 in spite of vigorous mining activities.

4 This study is aimed to investigate the mining impacts that accrue on the households over the years in the host mining communities of the Surigao Provinces. Under the aegis and advocacy of the Congressional Commission on Science and Technology and Engineering (COMSTE) through the innovation cluster on Responsible Mining, this study wishes to see what can be worked with in the host mining communities or how responsible mining strategies should be to boost local content, so that poverty reduction and sustainable development can be hastened in the concerned areas. In the process of studying the said issue, propensity score matching was used in the analysis of impacts with cross section data from 699 households. The strongest reason is to control bias and validity threats to empirical estimation.

5 Mining areas 405 households (Y i1 / D=1) Non-mining areas 294 households (surrogates for the missing counterfactuals or Y i 0 / D=1) For consistency check: Nearest neighbor (set at n=1) Kernel (epan bandwidth of 0.6) Radius (set at 0.01) With bootstrapping of errors and common support restriction

6 Table 1. The Socioeconomic Correlates of Mining (Probit Estimation) Variables Coefficients Standard Error P> Z Intercept Household size Age Gender Asset Loans Food expenditure Education expenditure Health expenditure Household income Educational attainment Years in the community Employed household members Number of observations 699 Log likelihood LR chi2(12) Prob>chi Pseudo R Mining = lower asset ownership, educational attainment, and years in the community; but higher food expenditure and number of employed members.

7 Table 2. Impact Estimates Through ATT of Various Matching Procedures Variables Nearest Neighbor Kernel Radius ATT T-value ATT T-value ATT T-value Household size * Age *** Gender Asset *** Loans Food expenditure * *** Education expenditure * Health expenditure * Household income Years in school/educational attainment 0.683** * *** Years in the community *** Employed household members *** *significant at 10% level of confidence **significant at 5% level of confidence ***significant at 1% level of confidence

8 The average treatment effects on the treated (ATTs) under radius matching are consistent with the socioeconomic determinants/correlates of mining as shown in the probit results. Household income and loans remain insignificant in the three procedures. Mining could cause higher health costs (nearest neighbor), higher food expenditure (kernel) and higher educational attainment (nearest neighbor & kernel).

9 Under nearest neighbor, the positively-signed health expenditures may signify the health hazards of mining externalities. Mining has induced promotion of human capital development through nutrition (higher food expenditure) and education (higher educational attainment), but falls short in catalyzing income effects (insignificant household income and loans that can be used in supporting entrepreneurial activities).

10 For poverty reduction and sustainable development in Surigao Provinces to speed up, responsible mining strategies should consider increasing premium investments for human capital development through education, entrepreneurship and health to boost local content and catalyze income effects of mining under a healthy and safe environment.