Accommodation of ecological and economic interests in placer gold mining

An attempt is made to find the answer to the question as to why the measures of the environmental institutions of Russia are ineffective for the avoidance and prevention of the degradation of aquatic ecosystems in placer gold mining. It is established that the size of payments to be made by companies engaged in placer gold mining are such that they almost cannot stimulate any nature conservation initiatives. Moreover, they even cannot be the argument for observance of environmental legislation. It is shown that the high transaction costs borne by the State, with minor expenditures of nature resource users connected with the protection of environmental natural systems fail to achieve the objectives imposed upon the supervising institutions. It is established that local authorities are directly interested in increasing placer gold mining as well as in gaining the loyalty of artels implying registration of the enterprise in this region, because these tax proceeds are exceptionally important for municipal formations facing a chronic financial deficit, a budgetary uncertainty and a dependence on regional and federal subsidies and transfers. Finance flows were calculated and analyzed to show that a very important problem for Russia’s eastern regions that involves reconciling the economic and ecological interests in placer gold mining is not resolved through “cosmetic changes” in organs of state supervision. It is concluded that there is a need for new institutional solutions in order to create and increase incentives for users of mineral resources and local authorities for observance of environmental regulations, the preservation and restoration of disturbed ecosystems, and for the ecologization of production processes.