Natural Resource Use Conflict: Gold mining in tropical rainforest in Ghana

• Extraction of gold in many tropical countries is done in rainforests that provide non-timber forest benefit flows. Our model is the first attempt at modelling this conflict in a developing country in the tropics where capital for mining is from foreign direct investment (FDI). We show that ad valorem severance tax on gross revenue from production is efficient if it is equal to the ratio of marginal forest benefit to marginal benefit from gold extraction. Furthermore, the growth rate of the tax is the difference between net return on all other assets in the economy and growth rate of exogenous price of gold. Moreover, the tax is negatively related to the price of gold but has time dependent relationship with discount rate. However, in steady state, it is negatively related to price of gold and discount rate.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

Optimal taxation

Efficiency

Externality

Dynamic analysis

Firm behaviour.

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