Accounting for unintended ecological effects of our electric future: Optimizing lithium mining and biodiversity preservation in the Chilean High-Andean wetlands

Diana Roa, Stale Navrud and Knut Einar Rosendahl

Resource and Energy Economics, 2023, vol. 75, issue C

Abstract: The intersection of mining activities and the preservation of fragile ecosystems presents a challenge, exemplified by the coexistence of lithium resources and the pristine High-Andean wetlands. In this study, we demonstrate the transformative potential of accounting for the intrinsic non-use values associated with these vital wetlands. By incorporating these values, we not only reshape optimal mining patterns but also forge a path towards enhanced environmental conservation. To quantify the value of affected biodiversity and ecosystems, we employ a meta-analytic benefit transfer function. Subsequently, we integrate these values into a competitive land use model that treats ecosystem services as valuable assets and incorporates the opportunity costs associated with mining activities. The results of our study reveal a compelling narrative: when the value of wetland ecosystems is considered, the pace of lithium extraction is markedly affected. The extent of this impact varies depending on factors such as wetland size, ecosystem service value, damage levels, and resource rents. By quantifying the ecological impacts of mining in economic terms, our findings present an avenue for policymakers to design a mineral extraction tax that complements a mitigation hierarchy to conserve these precious ecosystems.

Keywords: Ecosystem services; Benefit transfer; Wetlands; Land use models; Critical minerals (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:75:y:2023:i:c:s0928765523000441

DOI: 10.1016/j.reseneeco.2023.101389

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