Mine restoration bond for clay mining and its impact on the prices of building materials in Sri Lanka

In Sri Lanka at present, the mining of clay for the production of bricks and roof tiles is mechanized. The result of mechanized mining is deep pits left along river basins. These pits get filled with water during the wet season. Since pumping of water after the wet season for further mining becomes expensive, the excavator attempts to remove as much clay as possible during one dry season. Hence, the environment is changed drastically within a short period. This paper suggests a framework to analyse the social feasibility of clay mining, the feasibility of restoration (refilling) of clay pits after clay mining, and use of the mine restoration bond as a market based economic instrument to restore pits after mining. The social feasibility of clay mining is analysed by comparing net private benefits of clay mining with the social (environmental) costs of clay mining but excluding the cost of refilling. The feasibility of restoring clay pits is analysed by comparing the net benefits of clay mining including the net benefits of refilling and allowing for any reductions in the residual environmental costs of clay mining that are avoided through refilling. As a result the implementation of the mine restoration bond as a market based instrument, to internalize the externality caused by the excavated clay pit, is suggested. The impact of the mine restoration bond on the prices of clay, clay bricks and roof tiles (the basic building materials) is explored.