Deforestation, market linkages, and health: Evidence from slaughterhouse closures in Colombia

This paper studies the effects of sanitary regulation–induced infrastructure shocks on agricultural structure, production, and associated social and environmental outcomes. We exploit the implementation of a sanitation policy in Colombia that resulted in the closure of slaughterhouses in hundreds of municipalities. We estimate the causal impacts of these closures, using municipal-level panel data and a staggered difference-in-differences design. While the aggregate cattle herd remains unchanged, production becomes more concentrated: the number of large farms increases by 10%. This pattern is consistent with higher transportation costs to remaining slaughterhouses disproportionately affecting small-scale producers. We find no statistically significant effects on deforestation, despite a slight downward trend. In contrast, we document unintended public health consequences: slaughterhouse closures increase digestive disease–related health visits by 8.7%, and increase infectious and parasitic disease visits by 12.4%. This likely reflects the expansion of informal slaughtering activities. Overall, the results highlight the trade-offs associated with infrastructure reductions in rural economies and underscore the interconnected effects on market structure, environmental outcomes, and public health in developing countries.