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Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia

Author

Listed:
  • Gillespie Rob

    (Gillespie Economics)

  • Kragt Marit E.

    (University of Western Australia)

Abstract
Strategic inquiries into coal mining by Australian Governments advocate increased use of comprehensive benefit cost analyses and nonmarket valuation studies when assessing individual project proposals. The study reported in this paper addresses these Government concerns, by integrating results of a choice experiment into a benefit cost analysis undertaken for a Colliery in the Southern Coalfield of New South Wales, Australia. Results of the study were used to aid the State government in evaluating proposals for continued underground coal mining. We show that impacts of mine subsidence on streams, swamps, and Aboriginal sites negatively affect community wellbeing. Social welfare increases with the length of time that the mine provides direct employment. We demonstrate how implicit price estimates from the choice experiment can be incorporated into a benefit cost analysis of continued mining. Benefit cost analyses were carried out for a range of policy scenarios—including policies that would restrict mining activities at the Colliery and protect environmental and cultural features in the Southern Coalfield. Notwithstanding the environmental impacts generated by mining operations, continued mining is shown to be a more economically efficient course of action.

Suggested Citation

  • Gillespie Rob & Kragt Marit E., 2012. "Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia," Journal of Benefit-Cost Analysis, De Gruyter, vol. 3(2), pages 1-29, May.
    • Handle: RePEc:bpj:jbcacn:v:3:y:2012:i:2:n:4
    DOI: 10.1515/2152-2812.1101
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    2. MacDonald, Darla Hatton & Rose, John M. & Johnston, Robert J. & Bark, Rosalind H. & Pritchard, Jodie, 2019. "Managing groundwater in a mining region: an opportunity to compare best-worst and referendum data," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(4), October.
    3. Manero, Ana & Taylor, Kat & Nikolakis, William & Adamowicz, Wiktor & Marshall, Virginia & Spencer-Cotton, Alaya & Nguyen, Mai & Grafton, R. Quentin, 2022. "A systematic literature review of non-market valuation of Indigenous peoples’ values: Current knowledge, best-practice and framing questions for future research," Ecosystem Services, Elsevier, vol. 54(C).
    4. Windle, Jill & Rolfe, John, 2014. "Valuation framing and attribute scope variation in a choice experiment to asses the impacts of changing land use from agriculture to mining," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165888, Australian Agricultural and Resource Economics Society.
    5. Baker, Rick & Ruting, Brad, 2014. "Environmental Policy Analysis: A Guide to Non‑Market Valuation," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165810, Australian Agricultural and Resource Economics Society.
    6. Windle, Jill & Rolfe, John, 2014. "Assessing the trade-offs of increased mining activity in the Surat Basin, Queensland: preferences of Brisbane residents using nonmarket valuation techniques," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(1), January.
    7. S. Kok & A. L. Costa, 2021. "Framework for economic cost assessment of land subsidence," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 106(3), pages 1931-1949, April.

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