Private and Social Costs of Surface Mine Reforestation Performance Criteria

State mining regulations developed under the Surface Mining Control and Reclamation Act of 1977 (SMCRA) often specify fixed ground cover requirements or planting densities for forestry reclamation of surface mined lands before performance bond release is granted.  These criteria do not take into account variations in site conditions or many of the potential benefits of forest establishment, representing risk-averse strategies for ensuring at least minimal slope stability while providing ease of enforcement.  As such, these criteria may not be serving the best interest of either the mine operators or society.  Mine operators, who if allowed to vary ground cover and tree planting densities to best meet site conditions, could reduce costs of successfully establishing a forested site.  Also, by failing to recognize potential financial benefits of forest establishment, as well as corresponding ecosystem service benefits, these fixed performance criteria may be generating social costs where socially optimal levels of treatment are precluded.  Our paper establishes an economic framework for examining the private and social costs of fixed performance criteria, and reports results of an empirical analysis of ground cover requirements.  The magnitudes of private and social costs are examined under a range of site productivity class and market conditions.  Our work will provide a basis for evaluating tradeoffs between regulatory efficiency and optimal reforestation effort.