Environmental Liability, Insurance, and Market Structure in Coal Mining

Tom Eisenberg and Joshua Macey

Journal of the Association of Environmental and Resource Economists, 2026, vol. 13, issue 4, 1115 - 1151

Abstract: This study examines a Pennsylvania policy reform that increased bonded liability for coal mines with reclamation obligations. A 2001 change for surface mines was largely priced into existing reclamation insurance mechanisms, which exist to prevent mines from shirking their liabilities. We find that the changes increased mine-level insured liability and idling (≈15% for median mines), led to declines in production, and did not change environmental performance directly for treated mines. However, we do find that these effects were driven largely by higher polluting mines. Major results are robust to both comparing bituminous and anthracite mines within Pennsylvania as well as bituminous mines between Pennsylvania and Virginia.

Date: 2026
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