How Much Internalization of Nuclear Risk Through Liability Insurance?
AbstractAn important source of conflict surrounding nuclear energy is that with a very small probability, a large-scale nuclear accident may occur. One way to internalize the financial risks associated with such an accident is through mandatory liability insurance. This paper presents estimates of the willingness to pay for increased financial security provided by an extension of coverage, based on the `stated choice' approach. A Swiss citizen with median characteristics may be willing to pay 0.08 cents per kwh to increase coverage beyond the current CHF 0.7 bn. (US$ 0.47 bn.). Marginal willingness to pay declines with higher coverage but exceeds marginal cost at least up to a coverage of CHF 4 bn. (US$ 2.7 bn.). An extension of nuclear liability insurance coverage therefore may be effciency-enhancing.
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Bibliographic InfoPaper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0211.
Length: 18 pages
Date of creation: Sep 2002
Date of revision:
Publication status: Published in Journal of Risk and Uncertainty 29(3), 2004, pages 219-240.
risk; nuclear energy; liability insurance; internalization;
Other versions of this item:
- Yves Schneider & Peter Zweifel, 2004. "How Much Internalization of Nuclear Risk Through Liability Insurance?," Journal of Risk and Uncertainty, Springer, vol. 29(3), pages 219-240, December.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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