Future perspectives on sand extraction in Flanders, a simulation using dynamic optimization.

Abstract

Sand mining is not only vital to provide resources for the building and construction sector, but also provides jobs. However, sand reserves in Flanders (Belgium) are limited due to a strict demarcation of mining areas, turning sand into an increasingly scarce resource. Furthermore, sand mining activities have environmental costs. In this paper, a dynamic optimization problem is used, assessing the impacts of policy instruments on the evolution of sand extraction in time. The simulations of mining volumes and price paths for different types of sand (construction sand and filling sand) generate a view on the efficiency of a sand extraction tax with respect to depletion and overall welfare. As the results show, extraction taxes can postpone the depletion of construction sand mines in Flanders from 30 years to 41 years. Similar conclusions can be drawn regarding filling sand: an extraction tax postpones depletion from 52 to 72 years. Seeing these results, it is clear that extraction taxes have the effect that yearly mined sand volumes decrease. In addition to slowing down depletion of locally available resources for the construction sector, an extraction tax improves the discounted total welfare thanks to environmental gains and efficient public revenues.