This paper examines the labor market impacts of the 2015 Mariana Dam disaster in Brazil. It contrasts two theoretical models: an urban spatial equilibrium model and a factor of production model, with diverging perspectives on environmental influences on labor outcomes. Utilizing rich national administrative and spatial data, the study reveals that the unusual environmental alteration, with minimal human capital loss, primarily affected outcomes via the factor of production channel. Nevertheless, spatial equilibrium dynamics are discernible within certain market segments. This research contributes to the growing literature on environmental changes and its economic consequences.