Copper Mining and Environmental Costs in Dominica

A proposal from an international mining company to establish a copper mining operation in the Caribbean island of Dominica could be highly favourable, given the potential for financial benefits associated with such a project. On the downside, such projects are often associated with environmental damage. The area targeted for this copper mine was a rainforest in the north-eastern portion of Dominica occupying around 12 percent of the island’s total land area. A critical question is therefore whether copper mining could be a viable alternative to agrarian uses of the targeted area, if both financial and environmental costs are taken into consideration. A Contingent Valuation Survey of Dominicans and Visitors allowed for inclusion of non-market costs in the analysis. Cost-Benefit and sensitivity analyses were carried out to assess project feasibility. The results indicated that NPV was negative under conservative assumptions. NPV was sensitive to changes in the price of copper and the inclusion of environmental costs did affect the level of price increase required to make NPV positive.