Optimal allocation of federal coal land among competing uses
Thesis/Dissertation
·
OSTI ID:5742528
Using the techniques of optimal control theory, it is demonstrated that under usual perfect market assumptions, profit-maximizing firms will mine coal and reclaim the surface so that the sum of coal and surface rents are maximized. Moreover, it is shown that firms' mining and reclamation decisions will also maximize utilitarian social welfare. These results extend the theory of exhaustible resources which has ignored opportunity costs of surface disruption due to mining. Traditional theory has shown that firms should deplete resources at a rate that equates price to the sum of marginal extraction cost and the marginal value (user cost) of an unextracted unit of the resource. It is shown here that when surface disruption will occur, firms should equate price to the sum of marginal extraction cost, user cost, and marginal loss in surface value. Moreover, the result holds even if surface loss is irreversible. Unlike earlier theoretical work, the findings do not imply that mining should cease before the profitability of further mining reaches zero. These results suggest that the historic policy of leasing coal to private firms is consistent with welfare maximization. Furthermore, the findings indicate that federally mandated reclamation requirements will occasionally result in inefficient mining and reclamation. However, when external costs of surface mining are present, a strong government role is warranted.
- OSTI ID:
- 5742528
- Country of Publication:
- United States
- Language:
- English
Similar Records
Effects of pollution taxation on the pattern or resource allocation: the downstream diffusion case
Essays in applied microeconomics: measuring the multilateral allocation of rent and dual tests of market power
Determination of the existence of economic rents accruing in the United States coal industry and implications of increased coal severance taxation
Journal Article
·
Mon Oct 31 23:00:00 EST 1977
· Q. J. Econ.; (United States)
·
OSTI ID:5340278
Essays in applied microeconomics: measuring the multilateral allocation of rent and dual tests of market power
Thesis/Dissertation
·
Tue Dec 31 23:00:00 EST 1985
·
OSTI ID:5318011
Determination of the existence of economic rents accruing in the United States coal industry and implications of increased coal severance taxation
Thesis/Dissertation
·
Tue Dec 31 23:00:00 EST 1985
·
OSTI ID:6678200
Related Subjects
01 COAL, LIGNITE, AND PEAT
015000 -- Coal
Lignite
& Peat-- Economic
Industrial
& Business Aspects
017000 -- Coal
Lignite
& Peat-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294001* -- Energy Planning & Policy-- Coal
ALLOCATIONS
COAL RESERVES
ECONOMIC IMPACT
LAND RECLAMATION
LAND USE
LEASING
MARKET
MINING
OPTIMIZATION
PUBLIC LANDS
RESERVES
RESOURCE DEPLETION
RESOURCES
SOCIAL IMPACT
SURFACE MINING
015000 -- Coal
Lignite
& Peat-- Economic
Industrial
& Business Aspects
017000 -- Coal
Lignite
& Peat-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294001* -- Energy Planning & Policy-- Coal
ALLOCATIONS
COAL RESERVES
ECONOMIC IMPACT
LAND RECLAMATION
LAND USE
LEASING
MARKET
MINING
OPTIMIZATION
PUBLIC LANDS
RESERVES
RESOURCE DEPLETION
RESOURCES
SOCIAL IMPACT
SURFACE MINING