Costs of Learning about the Environmental Damage of Mining Projects

Two ways of gathering information about and mitigating the impact of a large‐scale mining project are briefly described and contrasted:one way involves postponing the construction and operation of the project while attempts are made to forecast, evaluate and prepare for its impact; the other way involves commencing immediately with a small‐scale, or attenuated, project with a smaller impact and by studying the effects of this project inferring the impact of a large‐scale project. The costs of the two alternative policies of postponement and attenuation are defied as reductions m the present value of the project in question. A model of open‐pit mining is perished which allows these costs to be calculated for any degree of postponement or attenuation. The model is applied to three uranium mines in the Northern Territory of Australia to estimate for each mine the costs of the two policies. The model is then used to estimate the costs of sequences of mine development in the Northern Territory involving various combinations of postponement and attenuation policies. The costs of these policies are then compared with the reduction in the impact of the industry using the population of a mining town site as a proxy for impact. This comparison is a first step towards a benefit/cost analysis of the two policies.