Sustainable development and mine management

Abstract

The sustainable development concept has generated a large body of literature. It has also divided economists into numerous schools of thought. The neoclassical, London, and other schools are painted in broad strokes in the first part of this paper. They debate the extent to which manufactured capital and “natural” capital are believed to be substitutes or complements in a macroeconomics context. The problem stems from the difficulty to measure “natural” capital. The second part of the paper looks at sustainable development in mining at the firm level. First, it is argued that the capital value of the mineral reserves can be maintained by discovering reserves or by saving part of the rent. Second, we show that mine manager actions can be induced to follow efficiency and equity principles when proper limits or constraints are imposed by the legislator. It is concluded that a set of indicators need to be defined and calibrated to ensure that the economic, environmental, and social limits imposed on the mine manager become a framework inside which he competes for the best interest of the firm.