ABSTRACT
Environment has been attracting considerable interest from the economics. It is generally held that markets do not allocate environmental resources efficiently. This is so because many environmental resources are public goods. There is obviously a need for environmental protection regulation. The point that Maxwell and Govindarajulu (1999) raise is how zealous that such a legislation should be. If it is too demanding, the mining operation would result in less than the optimal level of output. The diagram of Coase helps us to understand the economics of the environmental impacts of a mine in terms of curves for marginal damage to the environment (air, water, soil, noise, etc. pollution and aesthetic damage) versus marginal abatement cost (or marginal benefit). The most economically efficient level of environmental damage occurs where the marginal damage and the marginal benefit curves intersect (Figure 1.3.6).
