Optimising the Net Value of Water to the Mining Industry Through an Adaptive and Risk-Based Decision Framework

12 Pages Posted: 17 Dec 2015

See all articles by Saleem Ali

Saleem Ali

University of Delaware; University of Queensland, School of Politics and Sustainable Minerals Institute; Columbia Center on Sustainable Investment

Neil McIntyre

University of Queensland

Chris Moran

University of Queensland - Sustainable Minerals Institute

Date Written: December 15, 2015

Abstract

Water remains a key limiting resource for the oil, gas and mining industries. Often the geological deposits are located in arid areas and mineral processing requires large quantities of water. In planning for extractive industries infrastructure projects, cost/benefit analyses play a critical role. However, with government subsidies being offered for water and energy in many cases, the true value of hydrological resources in terms of their social and ecological importance gets eclipsed. We provide a review of methods which can be applied to valuing water that are ecologically appropriate as well as frameworks for considering social value of water. Four key attributes of the valuation process are addressed in our analysis: Benchmarking: How to establish a baseline value of water (i.e. prior to the mine), especially in non-stationary, already perturbed environments; Uncertainty: How does variability in water availability affect the value placed on it; Complexity: Indirect and non-linear effects of mines on water, e.g. population and land use change, and Formalisation: Quantifying or otherwise formally describing the social value of water. Recognizing that water’s social and ecological valuation might not be adequate policy drivers on project approval, a comparative framework provides a means for documenting the social and ecological risks of projects which move forward, given such a comprehensive valuation process.

Keywords: water valuation, mining, marginal utility, eco-services

JEL Classification: N50

Suggested Citation

Ali, Saleem and McIntyre, Neil and Moran, Chris, Optimising the Net Value of Water to the Mining Industry Through an Adaptive and Risk-Based Decision Framework (December 15, 2015). Available at SSRN: https://ssrn.com/abstract=2704078 or http://dx.doi.org/10.2139/ssrn.2704078

Saleem Ali (Contact Author)

University of Delaware ( email )

Newark, DE 19711
United States
8023380440 (Phone)
8023380440 (Fax)

HOME PAGE: http://www.saleemali.net

University of Queensland, School of Politics and Sustainable Minerals Institute ( email )

St Lucia
Brisbane, Queensland 4072
Australia
+61478876032 (Phone)

HOME PAGE: http://https://en.wikipedia.org/wiki/Saleem_Ali_%28academic%29

Columbia Center on Sustainable Investment ( email )

3022 Broadway
New York, NY 10027
United States

HOME PAGE: http://ccsi.columbia.edu/about-us/fellows-interns/

Neil McIntyre

University of Queensland ( email )

St-Lucia
Campbell Road
Brisbane, Queensland 4067
Australia

HOME PAGE: http://researchers.uq.edu.au/researcher/3004

Chris Moran

University of Queensland - Sustainable Minerals Institute ( email )

St Lucia
Brisbane
Australia

HOME PAGE: http://www.uq.edu.au/about/director-smi

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