A spatial difference-in-differences analysis of the impact of sugarcane production on respiratory diseases

• A spatial diff-in-diff model is proposed to identify the effect of sugarcane production on respiratory diseases
• We can control the effect of sugarcane production on both treated and untreated regions
• The effects on the treated regions are larger than if the effects on the surrounding areas were ignored.
• The effects on the surrounding areas are relevant, and almost as large as the effects on the producing areas.

Sugarcane production represents around 10% of the agricultural area and 1% of GDP in Brazil, and has grown substantially in recent years. The traditional harvest method involves burning the field to facilitate access to the canes, resulting in well-documented negative effects on health. The existing studies do not consider the effects on health in the surrounding areas. This article presents a new variety of a spatial diff-in-diff model to control for the effects of sugarcane production in neighboring non-producing regions. This method is an addition to the Spatial Econometrics literature, as it includes spatial effects on treated and untreated regions, so that the effects on both producing and surrounding non-producing regions can be properly estimated. The results indicate that the effects on the producing regions are 78% larger than if the effects on the surrounding areas were ignored. Moreover, the effects on the surrounding areas, typically ignored in other studies, are relevant, and almost as large as the effects on the producing areas.