Environmental Engineering Reference
In-Depth Information
Figure 6 Net present values (NPVs) of seven scenarios.
(Source: C. Chen and A. Randall, The economic contest between coal seam
gas mining and agriculture on prime farmland: it may be closer than we
thought, J. Econ. Soc. Pol., 2013, 15(3), Art. 5).
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agriculture-only (Figure 5) may be closed, given enough time and a low-
enough rate of discount.
CSG, either alone or in co-existence, generates greater NPV than agri-
culture in the baseline (i.e. mid-range) parameter scenarios, so long as
all CSG rents count in the calculation.
When only 10% of CSG rents count from an Australian perspective, the
only scenario in which CSG generates more NPV than agriculture is that
with parameter values systematically favouring CSG. If Australia re-
tained 30% of the CSG rents and parameters were set at baseline values,
CSG would have greater NPV in the co-existence case but not the CSG-
alone case.
When parameter values systematically favour agriculture, agriculture
generates greater NPV than CSG (alone or in co-existence) even when all
CSG rents count in the calculation.
Given the uncertainties and unknown unknowns, Chen and Randall
conceded the possibility that their worst-case analysis may have
understated the environmental damage from CSG development.
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5 Conclusions
Given the advantages the CSG industry in Australia enjoys - buoyant export
demand for LNG and an accommodating minerals rights, taxation and
