The extraction of minerals, and therefore the cumulative extraction leads to environmental damage. Thus, a conflict of interests between environmentalists, governments and firms exists. Since different taxes cause different strategies of firms, the protection of the environment is an important part of taxing minerals. Some taxes, as the property tax, increase extraction, which leads to environmental externalities. One of the goals of mineral taxing is therefore to internalize externalities by imposing the right tax. The Pigovian tax, or a nearly similar tax, serves as part of a combination to reach this objective. Taxes can initiate environmental behaviour, and can serve as a market-based alternative to intervening directly by regulating.
