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Private Arrangements to Cover Large-scale Liabilities Caused by Nuclear and Other Industrial Catastrophes

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  • Marcus Radetzki

    (Department of Law, Stockholm University,)

  • Marian Radetzki

    (Department of Economics, Lulea University of Technology, and with SNS Energy, Stockholm)

Abstract

Nuclear and other industrial activities create rare likelihoods for very large catastrophes. Available insurance, intra-industry pooling of risk and the net worth of those who cause the risk, provide an inadequate coverage for compensation of third-party damage. In OECD countries, the top layer of damage compensation after such catastrophes is regularly transferred, explicitly or implicitly, to governments. This constitutes a subsidy of the risk-creating industries. For a variety of reasons, traditional insurers are unwilling to assume full liability for the potentially colossal damage of industrial catastrophes. Such risks could be offloaded to the immensely larger capital market through the issue of catastrophe bonds. This would obviate the need for public subsidy, and provide a means for market pricing of the risks, but considerable needs for public intervention would nevertheless remain. The Geneva Papers on Risk and Insurance (2000) 25, 180–195. doi:10.1111/1468-0440.00058

Suggested Citation

  • Marcus Radetzki & Marian Radetzki, 2000. "Private Arrangements to Cover Large-scale Liabilities Caused by Nuclear and Other Industrial Catastrophes," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 25(2), pages 180-195, April.
    • Handle: RePEc:pal:gpprii:v:25:y:2000:i:2:p:180-195
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    Cited by:

    1. Soderholm, Patrik & Sundqvist, Thomas, 2003. "Pricing environmental externalities in the power sector: ethical limits and implications for social choice," Ecological Economics, Elsevier, vol. 46(3), pages 333-350, October.
    2. Jakob Eberl & Darko Jus, 2012. "Evaluating policies to attain the optimal exposure to nuclear risk," RSCAS Working Papers 2012/50, European University Institute.
    3. Michael Faure, 2009. "Environmental Liability," Chapters, in: Michael Faure (ed.), Tort Law and Economics, chapter 10, Edward Elgar Publishing.
    4. Tomas KÃ¥berger, 2002. "Swedish Nuclear Power and Economic Rationalities," Energy & Environment, , vol. 13(2), pages 191-206, May.
    5. Eberl, Jakob & Jus, Darko, 2012. "The year of the cat: Taxing nuclear risk with the help of capital markets," Energy Policy, Elsevier, vol. 51(C), pages 364-373.

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