Economic effects of western Federal land-use restrictions on U.S. coal markets

Abstract

Current regulations on land use in the Western United States affect access to surface minable coal resources. This U.S. Geological Survey study analyzes the long-term effects of Federal land-use restrictions on the national cost of meeting future coal demands. The analysis covers 45 years. The U.S. Bureau of Land Management has determined the environmental, aesthetic, and economic values of western Federal coal lands and has set aside certain areas from surface coal mining to protect other valued land uses, including agricultural, environmental, and aesthetic uses. Although there are benefits to preserving natural areas and to developing areas for other land uses, these restrictions produce long-term national and regional costs that have not been estimated previously. The Dynamic Coal Allocation Model integrates coal supply (coal resource tonnage and coal quality by mining cost for 60 coal supply regions) with coal demand (in 243 regions) for the entire United States. The model makes it possible to evaluate the regional economic impacts of coal supply restrictions wherever they might occur in the national coal market. The main factors that the economic methodology considers are (1) coal mining costs, (2) coal transportation costs, (3) coal flue gas desulfurization costs, (4) coal demand, (5) regulations to control sulfur dioxide discharges, and (6) specific reductions in coal availability occurring as a result of land-use restrictions. The modeling system combines these economic factors with coal deposit quantity and quality information--which is derived from the U.S. Geological Survey's National Coal Resources Data System and the U.S. Department of Energy's Demonstrated Reserve Base--to determine a balance between supply and demand so that coal is delivered at minimum cost.