Optimising the Net Value of Water to the Mining Industry through an Adaptive and Risk-Based Framework

CSRM Contributors:

Other Contributors:

  • Neil McIntyre
  • Chris Moran

Published by: CSRM

Water remains a key limiting resource for the oil, gas and mining industries. Often the geological deposits are located in arid areas and mineral processing requires large quantities of water. In planning for extractive industries infrastructure projects, cost/benefit analyses play a critical role. However, with government subsidies being offered for water and energy in many cases, the true value of hydrological resources in terms of their social and ecological importance gets eclipsed. We provide a review of methods which can be applied to valuing water that are ecologically appropriate as well as frameworks for considering social value of water. Four key attributes of the valuation process are addressed in our analysis: Benchmarking: How to establish a baseline value of water (i.e. prior to the mine), especially in non-stationary, already perturbed environments; Uncertainty: How does variability in water availability affect the value placed on it; Complexity: Indirect and non-linear effects of mines on water, e.g. population and land use change, and Formalisation: Quantifying or otherwise formally describing the social value of water. Recognizing that water’s social and ecological valuation might not be adequate policy drivers on project approval, a comparative framework provides a means for documenting the social and ecological risks of projects which move forward, given such a comprehensive evaluation process.