Factors Affecting the Rent to Surface-Mined Coal Tracts in the Powder River Basin and Green River/Hams Fork Region

摘要

This study develops a method to estimate annual rent to a coal tract which requires knowledge only of tract geological characteristics, mining technology characteristics derived from production function estimates, and prices. Cobb-Douglas and Constant Elasticity of Substitution production functions were estimated for twenty mines in the Powder River Basin and Green River/Hams Fork Region, using data on capital, labor, and energy inputs and data describing tract geological characteristics. The analysis found constant returns to scale and no effects of depletion on mining costs. The Cobb-Douglas specification appeared satisfactory. Surface coal mining in these two regions appears much less capital-intensive than nationwide estimates for surface coal mining previously offered. Of the geological characteristics considered in the analysis, only remaining reserves appear appropriately viewed as an input to mining. The stripping ratio (ratio of overburden to seam thickness) has a negative effect on tract rent. Almost exactly 12.5% of the value of output is attributable to the tract itself; so, keeping in mind the limitations of the data base and the statistical nature of the estimate, we suggest that the current federal royalty rate of 12.5% probably extracts a share of revenue very close to the government's ''proper'' share as owner of the tract. 20 refs. (ERA citation 11:010918)