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Sustainable management of mining operations with accidents: A mean-variance optimization model

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  • Choi, Tsan-Ming

Abstract

Sustainable management of mining operations requires careful considerations of environmental sustainability, economic sustainability and corporate social responsibility (CSR) related issues. Motivated by prior studies on accidents associated with mining operations, this paper builds a formal optimization model to address the above three sustainability related issues for a mining operation with the optimal decision on mining quantity. To be specific, we model the number of accidents as a Poisson distribution with a quantity dependent distribution parameter. We formulate the objective function via the mean-variance approach, and incorporate analytical constraints which relate to environmental sustainability and CSR into the model. We analytically derive the algorithm which can find the globally optimal solution for the optimization problem. After that, we further analyse when the mining company should consider implementing (i) the pollutant reduction technology, and (ii) the accident reduction technology. It is interesting to find that the mining company׳s degree of risk aversion affects the choice of pollutant reduction technology, but not the choice of accident reduction technology. Several other important insights are also analytically derived.

Suggested Citation

  • Choi, Tsan-Ming, 2015. "Sustainable management of mining operations with accidents: A mean-variance optimization model," Resources Policy, Elsevier, vol. 46(P1), pages 116-122.
    • Handle: RePEc:eee:jrpoli:v:46:y:2015:i:p1:p:116-122
    DOI: 10.1016/j.resourpol.2014.02.003
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    Cited by:

    1. Niu, Baozhuang & Chen, Lei & Zhang, Jie, 2017. "Punishing or subsidizing? Regulation analysis of sustainable fashion procurement strategies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 107(C), pages 81-96.
    2. Jiskani, Izhar Mithal & Cai, Qingxiang & Zhou, Wei & Lu, Xiang, 2020. "Assessment of risks impeding sustainable mining in Pakistan using fuzzy synthetic evaluation," Resources Policy, Elsevier, vol. 69(C).
    3. Suh, Dong Hee, 2021. "Exploring the U.S. mining industry's demand system for production factors: Implications for economic sustainability," Resources Policy, Elsevier, vol. 74(C).
    4. Bui, Nuong Thi & Kawamura, Akira & Kim, Kyoung Woong & Prathumratana, Lunchakorn & Kim, Tae-Heok & Yoon, Suk-Ho & Jang, Min & Amaguchi, Hideo & Bui, Duong Du & Truong, Ngoc Tu, 2017. "Proposal of an indicator-based sustainability assessment framework for the mining sector of APEC economies," Resources Policy, Elsevier, vol. 52(C), pages 405-417.

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    More about this item

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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