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An alternative to ban on mining in Aravalli’s in Haryana

Student name: Ms Priyanka Chakarwarty
Guide: Dr Soumendu Sarkar
Year of completion: 2019


Mining is an economic activity that causes extensive amount of damages to the environment. The problem that is presently receiving major attention in mining context is the impact of abandoned & orphaned mines on environment. These include natural habitat destruction, landscape changes, instability & degradation of land, contamination of soil etc. Although directives, regarding reduction of such environment impacts are present, but they are hardly followed because of lack of proper enforcement & hence moral hazard is imposed. In order to devise a way out of moral hazard several policies have been applied in international context, but solving this problem is not easy because of the characteristic of temporal separation. In several countries it has been treated using a bonding & an insurance system. But this has several limitations as they increase the cost of mining activities, the way the amount of bond is calculated etc. Thus an approach of property rights has been used in the paper to solve the problem. This approach incentivises the mine owners to undertake land reclamation activities. The paper also presents the way the amount of transferring such property rights should be calculated because the land where mining activities are undertaken could have several other economic uses.

Key words: moral hazard, land reclamation & rehabilitation, performance bonding, property rights, Net present value