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Preserving Natural Environments on Coal Lands at Minimum Cost

In the U.S., about 67 billion tons of coal (27% of the nation's surface minable coal) have been placed off-limits to surface mining by the Federal Land Policy Management Act and other restrictions in order to protect the environment. By the year 2005, it is projected that this reduction in coal reserves will add about $500 million per year to the nation's energy costs. As set-aside costs grow and the locked-up coal is perceived as progressively more valuable over time, it is likely that pressure will be brought on the U. S. Department of the Interior to revise its resource management plans. As a general rule, a rational management objective is to achieve a given amount of environmental preservation at the lowest cost. This paper provides an analytic framework, namely constrained cost minimization, for implementing that objective. Examples are given for protecting sage grouse and eagle habitat.

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Energy Specializations: Coal – Mining Techniques and Production; Coal – Policy and Regulation; Energy and the Environment – Policy and Regulation; Energy and the Environment – Other

JEL Codes: Q35: Hydrocarbon Resources, Q21: Renewable Resources and Conservation: Demand and Supply; Prices, Q24: Renewable Resources and Conservation: Land, Q41: Energy: Demand and Supply; Prices, Q31: Nonrenewable Resources and Conservation: Demand and Supply; Prices, Q48: Energy: Government Policy, L71: Mining, Extraction, and Refining: Hydrocarbon Fuels

Keywords: Coal, environmental protection, surface coal mining coal, coal demand, US, wildlife, DCAM model

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No1-6

Published in Volume17, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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