Economics at your fingertips  

A model of optimal extraction and site reclamation

Pauli Lappi

Resource and Energy Economics, 2020, vol. 59, issue C

Abstract: Environmental issues during and after extraction are a major problem in contemporary exhaustible resource production. Production operation deteriorates the state of the environment and is a source of possibly harmful emissions. After the extraction has ceased, the site is in need of reclamation and clean-up. This paper analyses the last two stages of exhaustible resource production: extraction and site reclamation decisions. The socially optimal regulation is investigated, and it is found that a pollution tax, a shut-down date and a requirement for the firm to deposit funds for costly reclamation can be used to incentivize socially optimal extraction of the resource. It is also found that the firm can be required to pay the monies to a reclamation trust at the beginning of the extraction operation, which protects the tax payers from the possible insolvency of the firm who tries to avoid paying for the reclamation.

Keywords: Dynamic optimization; Emission tax; Environmental policy; Exhaustible resources; Reclamation; Stock pollution; Waste (search for similar items in EconPapers)
JEL-codes: Q30 Q38 Q50 Q58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.reseneeco.2019.101126

Access Statistics for this article

Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders

More articles in Resource and Energy Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-12-18
Handle: RePEc:eee:resene:v:59:y:2020:i:c:s0928765519300120