Economic Analysis of Coal Waste Disposal: Research Considerations for Environmental Regulation

Abstract

In 2002, the National Academy of Sciences of the United States published a study of coal waste impoundments. This study outlined several economic and environmental research issues that remain unknown to regulators and policymakers. In response to the National Academy report, this paper outlines economic considerations regarding the commercial, social and environmental issues surrounding coal waste disposal in the United States. Of particular emphasis is the absence of estimates regarding the level of regulation currently in place concerning coal slurry impoundments. Optimal regulatory interventions should, we argue, be founded upon an understanding of market structure and the incremental net benefits that may be achieved by regulatory change. We review issues in market structure and in estimation processes for environmental evaluation of coal waste impoundments in the United States. We recommend three broad areas of research. First, we suggest a comprehensive evaluation of existing coal slurry impoundments be performed, to include cost benefit studies with environmental considerations included. Second, we recommend extensive surveys of social and economic consequences of coal waste impoundments that evaluate non‐environmental impacts. Finally, we recommend extensive clean coal research with focus on disposal and reclamation techniques.

Notes

See US 30 CFR 77.214, 77. 215 and 77.216

For regional definitions, see Energy Information Administration Coal Industry Annual, 2000, Appendix C.

See National Academies of Science (2002) Coal Waste Impoundments: Risks, Responses, and Alternatives Commission on Geosciences, Environment and Resources for alternatives to CSIs which may alter the magnitude of the influence of CSIs on coal production.

See Burton, Hicks & Kent (2001) The Fiscal Implications of Judicially Imposed Surface Mining Restrictions in West Virginia.

There is little horizontal integration outside of coal mining specifically.

These results are estimated, and explained in some detail in Burton, Hicks and Kent, 2001. The aggregate level of regional economies of scope (from surface to underground mining) is roughly 12.5 percent. This suggests that 100 tons of surface production generate roughly12.5 tons of underground mining in the same county. This is similar to Parr (2004).