Abstract
The consideration of taxes in economic-optimization models serves in most cases, if not all, as a complicating factor. This is especially the case in dealing with depletable resources such as coal, in which not only depreciation but also depletion must be taken into account. This article shows how depletion may be efficiently modeled and incorporated into existing depletable-resource-development models. The treatment of depletion in some previous resource development models is reviewed. Several linear-programming (either continuous or moxed-integer) development models that have as their objective the maximization of before-tax or after-tax cash flows are presented, ignoring depletion. The method to incorporate depletion into these development models is outlined. The author also discusses the additional computational burden that is added by considering depletion in the model. 12 references, 6 figures, 1 appendix.
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