Optimal Environmental Policy for a Mine Under Polluting Waste Rocks and Stock Pollution

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Abstract

This study analyzes socially optimal environmental policy for a mine with a model that takes into account waste or waste rock production and abatement possibilities of the mine. We develop a model, in which the mine produces an externality related to the waste rocks, such as acid mine drainage. We find that the extraction rate tends to be lower in a mine with higher waste rock production, and that the optimal tax on the waste rock production is strictly increasing in time. We extend the model to incorporate an additional externality in the form of a stock pollutant. We analyze the optimal taxes and show that the typical result that the time path of the tax on the stock pollutant is inverted U-shaped may be lost in a mine model with abatement possibility and fixed operation period.

Original languageEnglish
JournalEnvironmental and Resource Economics
Volume73
Issue number1
Pages (from-to)133-158
Number of pages26
ISSN0924-6460
DOIs
Publication statusPublished - May 2019
MoE publication typeA1 Journal article-refereed

Fields of Science

  • 1172 Environmental sciences
  • 511 Economics
  • Emission taxation
  • Exhaustible resources
  • Mining
  • Optimal control
  • Stock pollution
  • Waste rock
  • Q30
  • Q38
  • Q50
  • Q58
  • OPTIMAL TIME PATH
  • OPTIMAL ABATEMENT
  • FOSSIL-FUELS
  • EXTRACTION
  • CAPACITY
  • CHOICE
  • GRADE
  • ORDER

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