The development of modern sectors has long been linked to the displacement of traditional
agriculture. The economic literature has focused on explanations associated with
input reallocation, but has neglected other mechanisms, such as pollution externalities. To
explore this issue, we examine the case of gold mining in Ghana. Consistent with a spillover
effect driven by pollution, we find that mining has reduced crop yields and agricultural
productivity, increased air pollution and poverty, but has not changed input prices or demand.
The results highlight the importance of an alternative channel —unrelated to human
health— through which pollution can affect economic activity.