More than 85% of the 138 million tonnes of coal produced in Queensland in 2000/01 was exported accounting for $6.7 billion or approximately 32% of Queensland's export income. Although making a considerable contribution to the wealth of current Queenslanders, coalmining damages the environment and may be a diseconomy to future generations. The most obvious and immediate impact of strip-coalmining is the destruction of the landscape; however, there may also be both immediate and long-term damage to the watershed. Others may bear the cost of such damage. Following mine closure, the most environmentally damaging impact may not be to the mined land but rather to down stream water quality as a consequence of pollutants originating from the abandoned mine. The market deals poorly with the side effects or externalities of mining and the allocation of resources between present and future generations. Rehabilitating the strip-coalmine spoilpiles in Queensland currently costs around $26,000 per hectare or $90 million per annum. Surrounding land may be purchased for less than $1,000 per hectare. On several occasions, articles in the Courier-Mail have criticised the extent of the strip coalmining industry's backlog of environmental rehabilitation. The cost for completing the backlog was reported to be between $1 billion and $2 billion.
Rehabilitation practices in the strip-coalmines in Queensland's Bowen Basin have in the past been dictated by a potpourri of parliamentary acts, mine lease conditions, and environmental and water quality legislation. The environmental management of mining has been transferred from the Department of Mines and Energy (DME) to the Environmental Protection Agency (EPA) removing a perceived conflict of interest which existed when the DME was both a promoter of mining and the environmental regulator. The lack of a paramount environmental vision, evidenced in previous policy, has been resolved with the Australian and Queensland Governments' acceptance of the vision of ecologically sustainable development (ESD). Under the ESD vision, the EPA has established the objective of protecting or enhancing certain environmental values or various attributes; however, as yet there has been no attempt to place a value on or rank the attributes. The hypothesis of this thesis is that an improved environmental outcome is possible by reallocating the current rehabilitation expenditure amongst the competing environmental attributes. This will require the EPA to rank each of the environmental attributes, in collaboration with mine management, using appropriate risk analysis. The EPA and the mining companies will then have a defensible decision-making process. On the other hand, overly prescriptive regulations for strip-coalmines in Queensland will not achieve the highest net economic benefit, including environmental benefit, for the mining companies nor for the citizens of Australia.
Relevant welfare economic theory especially in relation to externalities, utility, obligations to future generations and the economic value of the environment is explored. Decision making theory has been incorporated into an environmental decision making hierarchy table for mining projects to show where decision-making responsibility should rest. An initial cost-benefit analysis (CBA) revealed that returning the land to grazing was not economically justifiable; however, the environmental benefits were not identified. In the next phase the relevant environmental attributes were identified and ranked using expert focus groups. The most pertinent findings were that downstream water quality and aesthetics are of more importance than land quality within the mine, whereas most environmental expenditure is focused on land related activities. Furthermore, there is a need for the EPA to clearly enunciate its environmental vision and objectives in relation to mine rehabilitation.
Although it has been possible to place the environmental attributes in ordinal rank, it is not yet possible to place a cardinal value on the attributes. Nor is there an accepted common measure of rehabilitation effectiveness, a prerequisite of cost-effectiveness analysis (CEA). If, however, downstream water quality was to be accepted as the single measure of effectiveness then current expenditure on mined land rehabilitation could be distributed so as to maximise downstream water quality. The data economist need in order to advise on more cost-effective rehabilitation procedures on the strip-coalmines are values for improved water quality in the Fitzroy catchment and values for improving the aesthetics of mined land. The current study indicates that it may be more effective to direct environmental rehabilitation expenditure toward minimising stream pollution rather than the current emphasis on growing vegetation on spoil piles. In the absence of more precise economic data, application of the precautionary principle would suggest that environmental expenditure be directed toward eliminating the risk of any long term regional environmental damage ahead of reducing environmental damage which can be contained within the mine sites.