As LEJ is indicating, the song has a strong factual base and protests in a fairly gentle but clear manner. The is a town of Paradise in Kentucky, about 30 miles northwest of Bowling Green. Click here and you will see a map that includes Airdrie Hill. I suspect it is in Muhlenburg County. The Peabody Coal Company does exist. For their view on life click here.
It has been a while since I have read about the struggles between coal companies and environmentalists, but as I remember the Peabody Company did bring in "the world's largest [mechanical] shovel" and it was the "last straw" for many in Kentucky.
It all makes me proud to be a John Prine fan.
Roger in Baltimore