A model of optimal extraction and site reclamation

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Environmental issues during and after extraction are a major problem in contemporary exhaustible resource production. Production operation deteriorates the state of the environment and is a source of possibly harmful emissions. After the extraction has ceased, the site is in need of reclamation and clean-up. This paper analyses the last two stages of exhaustible resource production: extraction and site reclamation decisions. The socially optimal regulation is investigated, and it is found that a pollution tax, a shut-down date and a requirement for the firm to deposit funds for costly reclamation can be used to incentivize socially optimal extraction of the resource. It is also found that the firm can be required to pay the monies to a reclamation trust at the beginning of the extraction operation, which protects the tax payers from the possible insolvency of the firm who tries to avoid paying for the reclamation. (C) 2019 Elsevier B.V. All rights reserved.

Original languageEnglish
Article number101126
JournalResource and Energy Economics
Volume59
Number of pages16
ISSN0928-7655
DOIs
Publication statusPublished - Feb 2020
Externally publishedYes
MoE publication typeA1 Journal article-refereed

Fields of Science

  • 1172 Environmental sciences
  • 511 Economics
  • Dynamic optimization
  • Emission tax
  • Environmental policy
  • Exhaustible resources
  • Reclamation
  • Stock pollution
  • Waste
  • EXHAUSTIBLE RESOURCE MARKETS
  • OPTIMAL ENVIRONMENTAL-POLICY
  • OPTIMAL CLEANUP
  • FOSSIL-FUELS
  • OIL
  • MINE
  • POLLUTION
  • COSTS
  • NONEXISTENCE
  • EXPLORATION

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