Welfare effects of mining externalities: a combined travel cost and contingent behaviour study

Abstract

ABSTRACTThis paper applied the combination of travel cost method and contingent behaviour method to estimate the change in the recreational use value of the tourism site as a result of the adjacent mine implementation. The externalities considered were the visibility of the mine to the highest peaks of the area, traffic and noise effects, impacts on endangered aquatic species, and impacts on recreational possibilities. The data, containing five observations from each respondent, were analysed with the negative binomial count data model. The results show the sensitivity of visitors to the geographical scope and magnitude of mining externalities and to the visibility of the mine to the highest peaks. Moreover, the number of intended visits to the area correlates with gender, age, and recreational activities. Compared to an average visitor of the site, anglers, paddlers, and overnight hikers were subject to larger losses in welfare. Alternative scenarios on future mining externalities correspond to 29%–86% reductions in annual number of trips, corresponding to an annual welfare loss of 196–577€ for an average tourist.