COAL BOOM & BUST CYCLE

The Economic and Social Costs of Coal Mine Development
​(Boom and Bust Cycle)

The development of coal towns during booms and their subsequent decline during busts often leads to significant economic and social downsides. These cycles are largely driven by fluctuations in coal demand, prices, and the shift to alternative energy sources. Key economic downsides include:

1.      Economic Dependency and Vulnerability
2.      Job Losses and Unemployment
3.      Decline in Property Values
4.      Reduced Public Revenue
5.      Economic Stagnation
6.      Environmental Cleanup Costs
7.      Debt and Financial Instability
8.      Social Disparities

The School of Public Policy Publications (University of Calgary) published in November 2021 a Research Paper “A MULTIPLE ACCOUNT BENEFIT-COST ANALYSIS OF COAL MINING IN ALBERTA”. They summarized:

The economic benefits — $440 million in undiscounted incremental tax revenues and $35 million in undiscounted incremental employment earnings — are overshadowed by the costs arising from the displacement of ranching, tourism and the negative environmental effects on water, vegetation, air and wildlife. Compounding these effects is the non-zero probability that the Alberta government will pick up the tab for reclamation costs, and the adverse social impacts on local communities and on Indigenous Peoples’ rights and interests. Therefore, any new coal mine development is unlikely to provide the province with a net benefit.

https://www.policyschool.ca/wp-content/uploads/2021/11/EFL53_Coal-Mining_Winter-et-al.pdf

The Pembina Institute published the brochure in February 2008. “Boom to Bust Social and Cultural Impacts of the Mining Cycle”:

The mining industry has a long track record of booms and busts. When mineral prices rise, new mines are built in a hurry. Host communities benefit from a jump in jobs, infusions of cash, and investment in infrastructure – the “boom.” However, when prices fall, production slows down and some mines close altogether. Communities suddenly find themselves facing unemployment, loss of income and a declining population – the “bust.”

What is clear is that the boom and bust cycle can take a heavy toll on communities. When assessing mine proposals, communities need to think critically about how – or whether – they can mitigate negative impacts, and plan accordingly.

Busts sometimes result in bankruptcy for mine operators, and mine sites may be abandoned without being properly shut down and cleaned up. That usually leaves taxpayers to pay for environmental restoration, while local communities deal with pollution in the interim. Canada’s Commissioner of the Environment has referred to abandoned mines as an “ecological time-bomb.”

https://www.pembina.org/reports/boombust-final.pdf