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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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May 02, 2005


Becker and Posner Debate The Nuclear Option To Our Energy Problem

Becker says the time has come.

The case against nuclear power plants is mainly based on three considerations. Fear of a serious nuclear accident, even worse than at Chernobyl, the risks in disposing and storing radioactive nuclear waste, and terrorist attacks on nuclear plants that might release large amounts of radioactive materials.

The chances of a serious accident at an American-approved nuclear plant is extremely low, given modern safety methods that are much better than even those at Three Mile Island, and new types of reactors that are safer still. The safety record is outstanding...

The second issue is the disposal of used fuel or waste from reactors since that waste is extremely radioactive. The options are either storage or reuse...

he Department of Energy has concluded that a facility could be built in the Yucca Mountains of Nevada that would be both safe and large enough to house an immense quantity of nuclear waste. Politics, not safety, is holding up the construction of this and equally safe alternatives.

France and some other nations recycle and reuse nuclear waste, so they do not have important waste storage problems. Given the general emphasis on recycling other wastes, it is surprising that America forbids recycling of nuclear waste. The answer seems to be that the United States has shied away from recycling because it produces plutonium, the ingredient for nuclear bombs. That seems less important now with the proliferation of nations with nuclear weapons.

The newest concern about nuclear power plants stems from the sharp growth in terrorist attacks, especially the 9/11 attack. This is an important development, but it is being met partly through greatly beefed-up security at American plants with additional guards, traffic barriers, and other security protections... Terrorist attacks on nuclear power plants that would release sizeable amounts of radiation are much more likely in less developed and less democratic nations that have looser safety standards than at American plants.

Posner says, in essence, let's allow the domecratic process to decide.

The question whether to permit or encourage the construction of additional nuclear electrical generating plants therefore turns on the weight given the various externalities that such plants produce, both positive and negative...

On the positive side, emphasized by Becker, nuclear power is “clean”...

A second positive externality, also stressed by Becker, relates to our dependence on foreign oil (and natural gas), a dependence that would be somewhat lessened by substituting nuclear fuel for fossil fuels in the generation of electricity...

... the problem of disposal assumes truly serious form because of the threat of terrorism

... if the U.S. were to commit itself to expanding its own nuclear generating capacity, it would be difficult to limit such expansion in Third World countries, where safety, terrorism, and proliferation risks are all much greater. Notice also that if only the U.S. expanded its nuclear power production, the impact on global warming would be even slighter than I have assumed.

But I have ignored a factor that seems particularly significant in the United States. Distinct from the “real” negative externalities of nuclear power is the widespread exaggeration of what might be called the “normal” hazards of nuclear energy. The risk of a nuclear accident is one of those “dread” risks that people attach greater weight to than the actual expected cost created by the risk justifies. From an economic standpoint, however, stubborn fears, even when irrational, count as real costs, because they impose disutility; in any event, democratic politics give weight to public opinion whatever its rationality...

I conclude that the case for actually subsidizing nuclear electrical generation has not been made. However, there is a stronger case for relaxing arbitrary regulatory barriers to the construction of new nuclear plants in the United States, provided that the widespread public fears of nuclear power can be overcome.

UPDATE: If you are in the mood to worry about the energy picture, The Prudent Investor has a post for you.

May 2, 2005 in Energy | Permalink

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Comments

You and the author are glossing over the feasibility of effectively and sufficiently re-using nuclear waste, or the likelihood of finding a populace in some region willing to take on storing this waste for basically, forever.

This is an omission big enough to drive a truck through. Strange the way some economists think. But don't get me wrong, I'm no economist basher. I'm reading this site after all.

Posted by: Duck Bill Platypus | May 02, 2005 at 11:33 AM

Well, something like 80% of French electrical power is nuclear-generated. While this has helped France wheather part of the impact of the second and the present oil shock, there are those who would argue that concentrating basically on a single energy source has a few drawbacks in terms of diversifying your risk.

Secondly, all nuclear plants in France are under very tight government control in terms of safety and security arrangements. We have been lucky so far and I certainly hope that our luck will hold, but let us not forget that, as plants multiply, so do the probabilities.

In any case, though I have no serious opinion, not living close to any future US plant, I would wonder if some might not feel uneasy at the prospects of companies such as famous Enron owning such plants.

I also wonder about the practical aspects of location, location, location. I am told that the US has not built a single oil refinery since 1976 due to the not-in-my-backyard attitude. I am also told that the California energy crisis was enabled by the fact that no Californian wanted to see a power-plant in his backyard, which then allowed the notorious above-mentioned company create an artificial shortage. Given this, I am led to wonder what the probability is of a nuclear plant being actually built anywhere in the US.

Posted by: godement | May 02, 2005 at 01:46 PM

Duck Bill --

To tell you the truth, this topic is way away from my area of expertise (if such a thing exists) and I don't feel qualified to either endorse these opinions or dispute them. I just thought they were interesting. Becker did make a claim about the feasibility of handling the waste problem. There is one comment over there already claiming that the Yucca study may have been "fudged," but no details were really offered. I hope some debate on that issue shows up there (or here).

Thanks for reading.

da

Posted by: Dave Altig | May 02, 2005 at 08:16 PM

Well, for one thing, you can forget your worry about what would happen "if only the U.S. expanded its nuclear power production": many countries are already expanding nuclear power, including mine (Finland; here Kyoto seems to have finally tipped the scales in a long debate on whether to build or not).

It's happening in many developing countries as well, including countries like China (the worst greenhouse gas offender) and Iran (one of the big fossil fuel producers, meaning that they're either shooting for nukes or have an insider perspective on the future of oil and gas, depending on which conspiracy theory you choose to believe in...).

Posted by: jaakkeli | May 02, 2005 at 09:02 PM

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