Optimal Production and Reclamation at a Mine Site with an Ecosystem Constraint

Reclamation and mineral production are modeled as joint products at a mine subject to an ecosystem constraint and the traditional depletion constraint. Reclamation is identified as the creation of additional “environmental slack” or expanding the capacity of the waste pile under the ecosystem constraint. The results of the dynamic model indicate that the mine will lose rent on the mineral product as the shadow price of environmental slack increases. Terminal time will be affected by the ecosystem constraint and rents are reduced. The model demonstrates that production will decrease over time, or tilting of production will occur even in the absence of a positive discount rate. The model is applied to the analysis of a hypothetical small open pit gold mine in Northern Idaho to illustrate the impacts of an ecosystem constraint on a typical mine