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Effect of Forced Relocation on Household Income and Consumption Patterns: Evidence from the Aynak Copper Mine Project in Afghanistan

Abstract In 2011, the government of Afghanistan and a Chinese mining company relocated an entire village near the Aynak copper mine, where they developed a mining site. This paper investigates the impact of this displacement on affected households’ income and consumption patterns using a difference-in-differences approach and primary household-level data from the villages around the mine in two periods: one just before relocation in 2011 and another in 2015. In 2011, all households of the Wali Kali village, one of the seven project-affected villages, were involuntarily relocated. Project-affected families (PAFs) claim that their traditional earning sources have been inadequately replaced by mine-related earnings and that, being separated geographically, they now face difficulty maintaining social networks that are necessary for their survival. Once lost, rebuilding social networks is not easy in war-trampled Afghanistan. This paper clarifies these shadowy effects of forced relocation and demonstrates that traditional daily labour income was reduced significantly and only partially replaced by income from mine-related activities among those who were relocated and that relocation significantly discouraged the participation in community life, reflecting the losses of social capital among the PAFs due to separation.