Report: Chuitna Coal Strip Mine Could Cost Alaskans $2B in Economic Losses
October 10, 2011 
Comments Off
A study released by the Center for Sustainable Economy concluded the proposed Chuitna coal strip mine could cost Alaska $2 billion over the 25 year life span of the mine.
The report calculates Net Public Benefit; the measure of total economic output of a project. Net Public Benefit is calculated by taking the total economic output, things like lease proceeds, taxes, royalties and the effect of jobs on the local economy then subtracts all the costs; things like salaries, materials, transportation, cost of reclamation, lost economic opportunity, environmental damages and such. In the end you know the true cost of a project–the net public benefit.
It is commonly accepted that to be economically viable from a public perspective, a project should have a benefit-cost ratio of at least 1, meaning for every $1 in economic output created by a project the project should create no more than $1 in economic losses.
Turns out when you do the math, the proposed Chuitna coal strip mine has a benefit-cost ratio of between .3134 to .1713, that means for every $1 of economic output the project creates nearly $6 of economic loss–$5.84 to be exact. That’s right, every $1 of economic output cost Alaskans nearly $6.
Not only would the proposed Chuitna coal strip mine be the first in Alaska’s history to mine through a wild salmon stream, but Alaskans would suffer $2 BILLION in economic losses in addition to ruining wild salmon runs and endangering the health of Cook Inlet fisheries.
Key points:
- The Chuitna coal project’s costs exceed benefits by a factor of at least 3 and up to a factor of 6.
- Chuitna coal project has a benefit-cost ratio of .3134 to .1713.
- A project that has a benefit-cost ratio below 1.0 is not economically viable from a public perspective.
- Taking allcosts into account the report finds the project would result in a net economic loss of $57 to over $75 billion over its 25 year life.
- This cost estimate takes into account factors that should be considered when contemplating large scale development.
- Air quality damages associated with emissions of sulfur dioxide, nitrous oxide, and particulate matter would generate a present value cost of $53.09 billion
- Carbon emissions damage associated with emissions throughout the life cycle of Chuitna coal would generate a present value cost of $17.26 billion
- The cost to Alaskans from the mining of the coal greatly exceeds the coals low value
- The social costs passed on to individuals could range between 193 and 604% of market price of the extracted coal.
Read the whole report here.
