The Economics of Land Reclamation in the Surface Mining of Coal: A Case Study of the Western Region of the United States

This report presents the results of a comprehensive case study of land reclamation in the surface mining of coal. The study focuses on the arid Western region of the United States, encompassing all significant known reserves of strippable coal in the states of Montana, North and South Dakota, Wyoming, Colorado, New Mexico, Utah, Arizona, Washington and Alaska. The purpose of the investigation was to empirically examine Western reclamation requirements and procedures and to perform a comparative economic analysis of reclamation costs. Local, state and federal laws, the principal means of controlling the reclamation efforts of the private mining industry, are carefully examined and evaluated. Within this framework of institutional control, the direct costs (i.e., the costs to the operator) of reclaiming "mined" lands are estimated. Other sources of surface disturbance (e.g., transportation networks, storage facilities) are not examined in this study. The analysis is based primarily on secondary sources of information. A limited field survey was conducted to provide corroborative evidence. Reclamation costs are derived, using an activity analysis approach and standard engineering cost schedules, for all major surface mines currently operating or planned for operation by 1980. Mine-specific costs are aggregated according to predefined coal production areas comprised of one or more counties, by state, and by subregions of several states, facilitating a comparative analysis of mining conditions, natural environments and institutional constraints. The results of the analysis indicate that the earthwork handling requirements of recontouring and topsoiling typically account for 70 to 80 percent of total reclamation costs in the Western region. Consequently, the physical configuration of mining sites yields substantial variations in reclamation costs both within and among coal production areas. At the state and regional levels of aggregation, the influence of site-specific requirements, although not as pronounced, tend to overshadow the more subtle influences of reclamation law and enforcement standards. The direct costs of current reclamation requirements and practices in the West range between $2,000 and $9,000 per acre of mined land. The average cost throughout the region is $3,500 per acre. On a per ton basis, estimates vary from a low of two cents to 34 cents, with an average for the region of about five cents per ton of coal mined. In terms of the impact of reclamation on market price, the range in costs account for as much as five percent at the upper limit, but average less than one percent of current western coal prices at mine-mouth. The study concludes that, since the large-scale surface mining of coal is a relatively new phenomenon in the West, and due to the fragile natural environments of many potential development sites in the region, it would be premature to suggest that successful reclamation can be "purchased" at the reported costs.