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How Much Internalization of Nuclear Risk Through Liability Insurance?

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Author Info

  • Yves Schneider

    () (Socioeconomic Institute, University of Zurich)

  • Peter Zweifel

    () (Socioeconomic Institute, University of Zurich)

Abstract

An 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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File URL: http://www.soi.uzh.ch/research/wp/2002/wp0211.pdf
File Function: First version, 2002
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Bibliographic Info

Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0211.

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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.
Handle: RePEc:soz:wpaper:0211

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Keywords: risk; nuclear energy; liability insurance; internalization;

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References

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  1. Andreas Polk, 2002. "Multilateral Agreement On Investments (MAI) - A Critical Assessment From an Industrial Economics Point of View," Working Papers 0201, University of Zurich, Socioeconomic Institute, revised Feb 2002.
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Citations

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Cited by:
  1. Stefan Buehler & Justus Haucap, 2003. "Mobile Number Portability," Working Papers 0303, University of Zurich, Socioeconomic Institute, revised Jul 2003.
  2. Heinzel, Christoph, 2008. "Implications of diverging social and private discount rates for investments in the German power industry: a new case for nuclear energy?," Dresden Discussion Paper Series in Economics 03/08, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  3. Peter Zweifel & Harry Telser & Stephan Vaterlaus, 2005. "Consumer Resistance Against Regulation: The Case of Health Care," Working Papers 0505, University of Zurich, Socioeconomic Institute.
  4. Stefan Buehler & Armin Schmutzler, 2003. "Asymmetric Vertical Integration," Working Papers 0306, University of Zurich, Socioeconomic Institute, revised Nov 2004.
  5. Botzen, W.J.W. & Aerts, J.C.J.H. & van den Bergh, J.C.J.M., 2009. "Willingness of homeowners to mitigate climate risk through insurance," Ecological Economics, Elsevier, vol. 68(8-9), pages 2265-2277, June.
  6. Polk, Andreas & Schmutzler, Armin, 2005. "Lobbying against environmental regulation vs. lobbying for loopholes," European Journal of Political Economy, Elsevier, vol. 21(4), pages 915-931, December.
  7. Buehler, Stefan & Haucap, Justus, 2006. "Strategic outsourcing revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 325-338, November.
  8. Simon Loertscher & Yves Schneider, 2005. "Switching Costs, Firm Size, and Market Structure," Diskussionsschriften dp0515, Universitaet Bern, Departement Volkswirtschaft.
  9. Hans Gersbach & Armin Schmutzler, 2004. "Globalization and General Worker Training," Working Papers 0403, University of Zurich, Socioeconomic Institute.
  10. Stefan Boes & Rainer Winkelmann, 2006. "Ordered response models," AStA Advances in Statistical Analysis, Springer, vol. 90(1), pages 167-181, March.
  11. Michael Breuer, 2004. "Optimal Insurance Contracts without the Non-Negativity Constraint on Indemnities Revisited," Working Papers 0406, University of Zurich, Socioeconomic Institute.
  12. Harry Telser & Karolin Becker & Peter Zweifel, 2004. "Validity and Reliability of Willingness-to-Pay Estimates: Evidence from Two Overlapping Discrete-Choice Experiments," Working Papers 0412, University of Zurich, Socioeconomic Institute, revised Mar 2008.
  13. Harry Telser & Peter Zweifel, 2003. "Validity of Discrete-Choice Experiments - Evidence for Health Risk Reduction," Working Papers 0313, University of Zurich, Socioeconomic Institute, revised Feb 2005.
  14. Michael Breuer, 2003. "Multiple Losses, Ex-Ante Moral Hazard, and the Non-Optimality of the Standard Insurance Contract," Working Papers 0302, University of Zurich, Socioeconomic Institute, revised Apr 2003.
  15. Michael Breuer, 2004. "Deductible or Co-Insurance: Which is the Better Insurance Contract under Adverse Selection?," Working Papers 0401, University of Zurich, Socioeconomic Institute, revised Oct 2004.
  16. Stefan Buehler & Armin Schmutzler, 2005. "On The Role of Access Charges Under Network Competition," Working Papers 0501, University of Zurich, Socioeconomic Institute.

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