Subsidence occurs when large areas of coal are mined and the resulting settlement of roof material into the void (the goaf) results in the surface subsiding over the affected area. The degree of subsidence that may result from mining will be determined by the thickness of coal extracted, the extent of the area mined, the nature of overburden present above the coal seam, and other geological factors. With shallow workings, subsidence at the surface may appear as sudden collapse of areas of the surface with steep fractures apparent, but this is rare. More commonly there is a gradual lowering of the surface strata which actually bends rather than fractures at the limits of the subsiding area. This bending leads to tensile strains in the surface strata (and possibly in structures on the surface) which may result in the formation of cracks. It is around the edges of the subsiding area where damage may occur. The central area of subsidence usually is subjected to a gradual lowering, possibly suffering some tilt and strain as the workings pass beneath. This may cause damage to such items as roads and pipelines but this is easily repaired and there is little evidence of it being a subsidence area after movement ceases. Structures, including houses, built in mining areas should be designed to accept a small degree of tilt and strain on a short term basis without suffering major damage.

In a mine where only first workings are used, subsidence is unlikely to occur, however given that most mines undertake some form of secondary extraction it will be an issue for the majority of mines. The relative importance of subsidence at a given mine is largely dependent on the nature of land use of the area above the workings.

Generally farming areas can accept considerable subsidence with no ill effects, but the location of water bores, roads, railways, any type of pipeline and possibly power lines must be considered. There are also some types of farm buildings which may need protection (e.g. poultry sheds, silos, etc).

It can be argued that the same can be said for national parks, catchment areas (apart from dam walls) and similar areas, but at present there is a prohibition on mining beneath national parks and much discussion on subsidence effects on creek beds and cliff lines.

Subsidence effects on settled or industrial areas are of major importance. In areas likely to be affected by mining, structures should be designed to allow for subsidence where possible. In some cases mining or at least secondary extraction may be prohibited due to the existence of structures not designed to withstand such movement.

Mines in NSW contribute to a fund controlled by a government authority (Mine Subsidence Board of NSW) to repair and/or compensate building owners for subsidence damage that may occur as a result of mining in Gazetted mining areas.

The amount of subsidence which occurs will depend on the thickness of coal extracted, the depth of the seam below surface, the strata types above the seam and the area of coal extracted (up to a certain critical area). The effects on the surface will depend on the amount of subsidence, the surface topography, the location of surface structures or items relative to edges of extracted areas and the presence of any geological structures. Note that "surface effects" may also have to be applied to sub-surface items such as bores.

"Upsidence" is also a surface phenomenon associated with mining and subsidence and occurs where workings pass beneath a gorge or similar surface feature causing a concentration of horizontal stress in the strata between the bottom of the feature and the top of any goaf cavity. This increased stress may cause strata beds close to the surface to bend upwards and possibly fracture.