Optimal clean-up of polluted sites

Lappi, Pauli

doi:10.1016/j.reseneeco.2018.07.003

Cited by 11 publications

(21 citation statements)

References 23 publications

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“…The result regarding the the discounted rehabilitation cost in Part (i) of this proposition replicates the results of Lappi (2018). The discounted rehabilitation cost is either strictly increasing or strictly decreasing in the initial pollution stock depending whether the rehabilitation occurs at the boundary or at the interior of the interval [T 1 , T 2 ].…”

Section: Waiting Is Allowed: Rehabilitation As a Jump In The Stocksupporting

confidence: 77%

“…Proof. (The proof is the same as in Lappi (2018) apart from the notation and is shown here for completeness.) The qualitative theory of differential equations is applied.…”

Section: A1 Proof Of Propositionmentioning

confidence: 99%

“…This problem with T 1 = 0 has been analyzed in Lappi (2018). 10 Since there is only one rehabilitation operation, and since the solution, N(t; n T 1 , T 1 ), exists for the initial value problem in (4), the above problem is equivalent to the problem…”

Section: Waiting Is Allowed: Rehabilitation As a Jump In The Stockmentioning

confidence: 99%

“…5 This is the reason why this study uses a two-stage model, in which the production stage is followed by the rehabilitation stage. As the description of the rehabilitation stage, two models are applied: first, the clean-up model of Lappi (2018), which allows waiting with the cleanup; and second, the clean-up model of Caputo and Wilen (1995) in which the pollution or waste stock is cleaned continuously as time goes on. 6 Policy implications.…”

Section: Introductionmentioning

confidence: 99%

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A model of optimal extraction and site reclamation

Lappi

2020

Resource and Energy Economics

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Environmental issues during and after production are a major issue in contemporary exhaustible resource production. Production deteriorates the state of the environment and is a source of possibly harmful emissions. After the production has ceased, the production site is in need of rehabilitation. This paper analyzes the last two stages of exhaustible resource production: The production and rehabilitation decisions. The socially optimal regulation is investigated, and it is found that a pollution tax, a shut-down date and a requirement for the firm to deposit funds for costly rehabilitation with a profit tax are enough for the socially optimal extraction profile. It is also found that it is irrelevant from the social point of view when the firm pays the funds.

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Section: Waiting Is Allowed: Rehabilitation As a Jump In The Stocksupporting

confidence: 77%

“…Proof. (The proof is the same as in Lappi (2018) apart from the notation and is shown here for completeness.) The qualitative theory of differential equations is applied.…”

Section: A1 Proof Of Propositionmentioning

confidence: 99%

Section: Waiting Is Allowed: Rehabilitation As a Jump In The Stockmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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A model of optimal extraction and site reclamation

Lappi

2020

Resource and Energy Economics

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“…Other relevant papers examining environmental bonds and liability includeShogren et al (1993), Cornwell & Costanza (1994,Kaplow & Shavell (1996),Costanza & Perrings (1990), andGerard & Wilson (2009), among others.11 Other related papers includeIgarashi et al (2010);Lappi & Ollikainen (2019);Lappi (2018);White (2015) White (2015). analyzes a bond and Pigouvian tax in a static model with a focus on bankruptcy risk and the potential for extending liability for cleanup to investors.…”

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confidence: 99%

Leaving Your Tailings Behind: Environmental Bonds, Bankruptcy and Waste Cleanup

Aghakazemjourabbaf

Insley

2020

SSRN Journal

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The paper studies the impacts of an environmental bond, which fully covers waste cleanup costs, on a mining firm's optimal actions when bankruptcy may shift cleanup costs to the government. A firm's stochastic optimal control problem is described by an HJB equation with the resource price modelled as an Ito process. A theoretical result is derived, showing that when a firm does not have the option to declare bankruptcy, the bond has no impact on the optimal controls. In contrast, if a firm does have a bankruptcy option and if no environmental bond is required, the firm produces too much waste relative to a benchmark case, resulting in an efficiency loss and a cleanup liability imposed on government. In the presence of a bankruptcy option, a bond ensures that the firm acts optimally and no efficiency loss is imposed on society. A numerical solution of the HJB equation is implemented for a hypothetical copper mine and results are analyzed for two different models of bankruptcy risk.

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Social and Environmental Impacts of Rare Earth Mining, Processing, and Proliferation: Scoping and Preliminary Assessment

Klinger

2023

Archimedes

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Optimal clean-up of polluted sites

Cited by 11 publications

References 23 publications

A model of optimal extraction and site reclamation

A model of optimal extraction and site reclamation

Leaving Your Tailings Behind: Environmental Bonds, Bankruptcy and Waste Cleanup

Social and Environmental Impacts of Rare Earth Mining, Processing, and Proliferation: Scoping and Preliminary Assessment

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