Environmental Engineering Reference
In-Depth Information
governments as sub-surface rights-holders, analysts conclude that they have
left a considerable proportion of the net benefits on the table, i.e. failed to
collect a substantial portion of the economic value of the nation's mineral
resources depleted. 12
2.2.4 Boom and Bust. The projected economic benefits of CSG are not
assured in the long run. While current projections are for high and stable
commodities prices for the life of the planned projects, the extractive
industries historically have experienced cycles of boom and bust. 13,14 In
Australia there is an on-going debate as to whether the present boom also
will exhaust itself in due course. The optimistic case depends on a number
of strong assumptions: the economic momentum of the major Asian
importing countries maintains a smooth upward path; Australia, despite
its high cost structure, will continue to withstand competition, especially
from shale gas extracted in other countries; and so on. The situation
regarding competition among exporters may be volatile: substantial price
differentials persist in international LNG markets, effectively insulating
Australian exporters from competition from much cheaper North
American shale gas. 15 Economists would expect these price differentials to
be diminished or eliminated as time passes.
2.2.5 Damage, as well as Benefit. The economic concept of benefit is dir-
ected ultimately to the bottom line. There is a conceptual symmetry of
benefit and cost: a cost avoided is a benefit and a benefit foregone is a
cost. This sounds complicated, but clarity readily is regained if we place
benefits and costs on the same scale, assign positive (negative) value to
things that make us better (worse) off, and sum it all to calculate net bene-
fits. From that perspective, a consideration of benefits also must consider
the costs of any damage resulting from extraction, processing, and trans-
portation of minerals. All of these processes are environmentally intrusive
to some degree, and many of them impose damage, not always fully com-
pensated, on surface-based private and public activities and on ground-
water. The costs of consequent damage are not always easy to measure,
but it is well-established that they can be large.
2.3 Australian Minerals Rights and Resource Taxation Policies
Encourage Extraction
It is well-known that minerals rights and taxation regimes influence the rates
of extraction and the distribution of rewards therefrom. 16,17 In addition to
generating revenue for government and providing an instrument for man-
aging the rate of extraction, it was argued above that minerals taxes might be
used to generate capital reserves for reinvestment to promote economic
sustainability. Thus minerals rights and taxation policies are important
considerations in any discussion of CSG mining and the national interest.
 
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