A Multiple Account Benefit-Cost Analysis of Coal Mining in Alberta

Jennifer Winter, Megan Bailey, Emily Galley, Chris Joseph and Blake Shaffer. "A Multiple Account Benefit-Cost Analysis of Coal Mining in Alberta." The School of Public Policy Publications 14:32, https://www.policyschool.ca/wp-content/uploads/2021/11/EFL53_Coal-Mining_Winter-et-al.pdf

97 Pages Posted: 29 Oct 2021 Last revised: 15 Nov 2021

See all articles by Jennifer Winter

Jennifer Winter

University of Calgary - The School of Public Policy; University of Calgary - Deptartment of Economics; Environment and Climate Change Canada

Megan Bailey

University of Calgary

Emily Galley

University of Calgary

Chris Joseph

Swift Creek Consulting

Blake Shaffer

University of Calgary

Date Written: September 15, 2021

Abstract

We examine the positive and negative effects of coal mining in Alberta from a social perspective — that of the province of Alberta rather than the project proponent — using benefit-cost analysis. We provide estimates of the economic, social and environmental impacts (benefits and costs associated with the development, construction, operation and reclamation) of an illustrative coal mine in the Eastern Foothills of Alberta’s Rocky Mountains. Our analysis is meant to inform the public on the potential trade-offs associated with additional coal development, and support and inform Alberta’s current coal policy review. Our analytical framework relies on the method of multiple account benefit-cost analysis. We find small economic benefits in the form of incremental tax revenues ($440 million, undiscounted dollars) and employment earnings by mineworkers ($35 million, undiscounted dollars). Given any individual mine’s small size relative to Alberta’s overall economy, there is unlikely to be any material increase in economic activity relative to the absence of mine development. In contrast, costs to Alberta are likely to be significant. These costs come from displacing other economic activity (primarily ranching and tourism); significant and adverse environmental impacts on water, wildlife, vegetation and air; a non-zero probability the province will be responsible for reclamation liabilities; negative social impacts on nearby communities; and interference with Indigenous Peoples’ interests and rights. Overall, we conclude that coal mine development is not likely to be a net benefit to Alberta, and the costs are likely to outweigh the benefits.

Keywords: coal mining, Alberta, public interest

JEL Classification: Q32, Q35, Q38, Q51, Q58, D61

Suggested Citation

Winter, Jennifer and Bailey, Megan and Galley, Emily and Joseph, Chris and Shaffer, Blake, A Multiple Account Benefit-Cost Analysis of Coal Mining in Alberta (September 15, 2021). Jennifer Winter, Megan Bailey, Emily Galley, Chris Joseph and Blake Shaffer. "A Multiple Account Benefit-Cost Analysis of Coal Mining in Alberta." The School of Public Policy Publications 14:32, https://www.policyschool.ca/wp-content/uploads/2021/11/EFL53_Coal-Mining_Winter-et-al.pdf, Available at SSRN: https://ssrn.com/abstract=3924693 or http://dx.doi.org/10.2139/ssrn.3924693

Jennifer Winter (Contact Author)

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

HOME PAGE: http://www.policyschool.ca

University of Calgary - Deptartment of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Environment and Climate Change Canada ( email )

Gatineau
Canada

Megan Bailey

University of Calgary

University Drive
Calgary, Alberta T2N 1N4
Canada

Emily Galley

University of Calgary

University Drive
Calgary, Alberta T2N 1N4
Canada

Chris Joseph

Swift Creek Consulting

Canada

Blake Shaffer

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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