United States and is likely to be of major importance in the future energy policy of this country. Of concern to many planners are the land use implications of increased production of coal, especially the increasing percentage and the changing spatial pattern of production coming from strip mines (Fig. i). Although the Appalachian region presently produces the bulk of the coal in the United States, primarily from underground mines, indications are that future production from western fields will take a larger share of the coal market at the expense of eastern production.' Some of the largest coal deposits in the country are located just east of the Rocky Mountains, notably in the states of Montana, Wyoming, North Dakota, and Colorado (Fig. 2). Located at depths of o0 to 150 feet, the bulk of these coal seams are well suited for strip mining and would have a recovery rate of more than 70 percent. Although the BTU content is somewhat lower than that of eastern coal, western coal is low in sulfur content and, therefore, desirable for utilization in the generation of electricity. The land use implications and spatial allocation decisions involved with the increase of mining activities in the West is of major concern to the future of energy production in the United States. In this paper we focus on decisions that involve competitive land uses, in particular those that relate to the extraction of exhaustible natural resources. We examine the marketplace as one device used in making such decisions and consider the dangers involved in leaving these matters solely to it. Guidelines for spatial allocation decisions are outlined in an effort to incorporate nonmarket factors relevant to land use decisions concerning mining. We also consider the impact of mining on regional income and employment. THE MARKET Watkins, Colorado, is not in the forefront of discussions about mining or the energy crisis. It is a rural community in a nation that is urban; it is on the High Plains in a state known for its mountains. But it has coal. Inconveniently, Watkins also has considerable amounts of grazing land devoted to the production of beef, and it offers pleasant living to people who seek escape from the urban ills-but not the jobs-of nearby Denver. Coal mining, cattle grazing, and urbanization are not compatible activities; they may even make disagreeable neighbors. As a result Watkins, like other communities rich in resources, is faced with important land use choices that will determine the fundamental quality of the area and the nature of its growth.2 Consider, then, a hypothetical rancher in Watkins, on whose ranch deposits of coal have been discovered. The rancher has worked his thousand acres for the past fifty years. He owns
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