AN ECONOMIST'S PERSPECTIVE ON MINING AND THE ENVIRONMENT

Mining inevitably affects the natural environment. The challenge is not to eliminate environmental damage. Rather, in the short term, the challenge is to balance the economic benefits of mining with the associated environmental damages. Over the longer term, the challenge is to develop new and better ways of mining and mineral processing that both enhance production efficiency and reduce damage to the environment. This talk compares and contrasts alternative policy approaches in meeting these challenges: command-and-control regulation, market incentives, and voluntary approaches. The talk also examines the question, do strict environmental rules help or hurt the competitiveness of firms operating under the strict rules? Some observers argue that strict environmental rules impose additional costs on firms and thus hurt competitiveness, relative to firms operating under less-strict rules. Others, however, argue that certain types of environmental rules actually encourage innovations that over the longer term result in greater profitability, as well as reduced environmental damage.