Environmental Engineering Reference
In-Depth Information
As emphasised early in this chapter, many of the environmental impacts
of CSG development are uncertain or unknown, and there is always un-
certainty about the key economic variables, e.g. demands, production con-
ditions and prices. For key variables whose values are unknown or known
but subject to uncertainty, sensitivity analysis was conducted to identify the
effects of a plausible range of values for these variables on the net benefits.
Baseline (roughly, mid-range) estimates of key variables, the range of values
used in sensitivity analysis, and data sources are documented.
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From a national perspective it is reasonable to evaluate CSG in terms not
of its net value to the mostly international operators, but of the net value
retained in Australia. While the royalties collected by state and territorial
governments (nominally 10% ad valorem, but actual collections are some-
what less) are readily observable, the proportions of corporate tax receipts
collected and earnings accruing to Australian stockholders in multi-national
CSG operators that can be attributed to exhaustible resource rents are much
more opaque.
Sensitivity analyses were conducted for six key variables: the price of
CSG, the proportion of CSG rents captured in Australia, the rate of growth
in value of agricultural output, the external environmental costs of CSG, the
level of agricultural degradation caused by CSG extraction, and the dis-
count rate applied to calculate NPV. In addition, three distinct cases were
evaluated: agriculture alone, CSG alone, and co-existence of agriculture and
CSG. To simplify exposition while delivering the key messages, we defined
seven scenarios and calculated NPVs for four cases for each scenario
(see Figure 6). The scenarios included two agriculture-only vs. CSG-only
scenarios, with parameter values favourable for agriculture and baseline
values, respectively; and five co-existence vs. agriculture-only scenarios,
with parameter values favourable for agriculture, all values low, baseline
values, all values high, and values favourable for CSG, respectively.
The four cases were: CSG where all rents count, agriculture only, CSG
where Australia retains 10% of rents, and CSG where Australia retains 30%
of rents.
4.1 Results
The key results of this analysis include the following:
In the case of agriculture and CSG co-existence, the key immediate
impact of CSG on rents from agriculture is diminished agricultural
productivity arising from loss of land and restricted mobility of farm
machinery, both attributable to CSG wells and infrastructure.
After the CSG has been depleted, the co-existence annual net
benefits will always stay below the agriculture line as diminished agri-
cultural production continues long into the future. This indicates the
possibility that the net annual benefits gap between CSG mining and
