Benefit-Cost Analysis Of Surface Coal Mining

Problems related to strip and auger coal mining have grown with the development of the industry and the economy. New technology has produced equipment that has made mining by surface methods not only highly productive, but potentially highly destructive of water resources and natural environments. On the other hand, growth of the economy has produced an increased demand for clean water and created new demands for amenity values that natural environments provide. Thus, opposing forces have created conflicts in resource use. And these conflicts have made surface mining highly controversial. Resolving the controversy will require the solving of complex economic and social problems. The essence of the economic problem created by surface mining is that, in the absence of proper regulation, substantial costs resulting from the process are borne by the public rather than the mine operator. The major goal for the regulation of the surface mining industry is to provide controls which will promote the attainment of maximum social welfare. Deciding upon the type of controls required, and how to apply them to attain a social optimum, however, poses some very difficult problems. In a comprehensive article on this subject, David B. Brooks defined the problem and suggested that benefit- cost analysis might be helpful in providing guidelines for making decisions about surface mining regulations.1