Why don’t environmental bonds fully cover reclamation costs?
Payne Institute Faculty Fellow Graham Davis and Peifang Yang write about how governments often require that extractive industry firms post environmental bonds as financial assurance to cover eventual reclamation liabilities. Such bond requirements frequently do not fully cover the reclamation cost. We show that a revenue-maximizing government may reasonably require a bond amount smaller than the full reclamation cost. March 17, 2021.