An economic assessment of a pollution externality : the case of Utah Mines
Date
1978
Authors
Vermeer, Rebecca Arrieta
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Abstract
Island Copper Mine of Utah Mines Ltd. is currently discharging its mill tailings into Rupert Inlet, northern Vancouver Island, at the rate of 82,000 cubic meters per day. It is the largest permitted marine discharge of mine tailings in British Columbia. Since 1971, the mine has dumped over 80 million tons of the effluent. Contrary to the mine's predictions, the tailings have spread throughout Rupert Inlet, and much of Holberg Inlet and Quatsino Sound, and constitute a serious threat to the marine ecosystem. The extent of the present and anticipated degradation of the Inlets and the Sound has led some government biologists to recommend an alternate disposal scheme. The economic efficiency of impounding the tailings on land as an alternative to marine discharge is examined. Under certain assumptions, the economic benefits that could be precluded by continued discharge of tailings into Rupert Inlet are evaluated and compared to the costs of impoundment. The stream of benefits are generated by the commercial fisheries, sportfisheries, and the option value of the non-augmentable marine resource. Of these benefits, the salmon sportfishery has the largest monetary value. The Krutilla-Fisher mode l of valuating natural resources was modified to simulate the loss in benefits to the salmon sportfishery. Using this model, the magnitude of the potential losses from the salmon sportfishery alone exceeds the costs of impounding the tailings for the duration of the mine . It is therefore concluded that a plausible case for termination of the present discharge method and adoption of a terrestrial disposal system exists.