Valuing the Non-Market Impacts of Underground Coal Mining

A strategic inquiry into underground coal mining in New South Wales, Australia, identified the need for non-market valuation studies and recommended increased use of benefit cost analysis in assessing individual mining proposals. This paper reports on the results of a choice experiment undertaken for a mine in the Southern Coalfield of New South Wales. Results from the study are used to aid the government decision by evaluating alternative proposals to continue underground coal mining operations. Results show that community wellbeing declines with increases in the kilometres of streams, the hectares of swamp, and the number of Aboriginal sites affected by mine subsidence. Community wellbeing increases with the length of time that the mine provides 320 jobs. Implicit price estimates from the choice experiment were incorporated into a benefit cost analysis of continued mining at the mine to assess the economic efficiency of a range of environmental restrictions on the proposed mining operations. Even though the mine generates negative environmental externalities, the continuation of mining was found to be economically efficient under a range of policy scenarios.