4.5 Cost Assessment Fails to Provide Guidelines
into Mitigation Policies
Current research on cost assessment focuses on providing complete assessments by
identifying more and more consequences of an accident. This trend is necessary, but
is not adapted to mitigation policies. First, the theory of “sunk costs” [45] explains
that once a cost has been incurred, it is no longer relevant for decision making
regarding the future. In the case of mitigation policies, the capital losses due to the
destruction of a power plant are incurred at the time of the accident. Those losses
are an example of sunk costs, and should thus not enter the mitigation policy
decisions. Current estimates, as they account for all kinds of losses regardless of the
time at which they are incurred, cannot be used in the determination of mitigation
policies. This observation raises one question: can we expect cost assessments to
provide useful guidelines for mitigation policies?
We believe it can. Cost-benefit analysis (CBA) of countermeasures could provide at least three useful insights regarding mitigation policies. First, it was shown
by the report on the consequences of Chernobyl that countermeasures are costly
[32]. Cost-benefit analysis could thus help determine which countermeasures are
most efficient by comparing their costs to society with the valuation of the prevented damage. Second, there are numerous countermeasures that address the same
harmful consequences. Some measures are substitutes (emergency relocation and
confinement), while others are complements (iodine prophylaxis and confinement).
Hence the assessment of their costs and benefits could help policy-makers identify
tradeoffs or synergies when implementing several countermeasures. Finally, the
consequences of a nuclear accident do not happen all at once. Cost-benefit analysis
is thus a good tool to search for the optimal inter-temporal allocation of mitigation
resources.
This kind of assessment is already carried out in other hazardous activities such as
car accidents or biosecurity [46, 47]. In the case of nuclear power, Munro studied the
tradeoff between long-term relocation and land decontamination. As radioactive
decay reduces the cost of land decontamination over time, he calculated the optimal
decontamination date which occurs approximately ten years after the accident [48].
Other studies also focus on particular tradeoffs between countermeasures, namely
land decontamination and food restrictions [49, 50]. Yet, these studies focus on
multi-criteria decision making rather than on performing a CBA of countermeasures.
Existing studies that deal with mitigation only focus on long-term countermeasures. Being able to deal with emergency countermeasures is a barrier that
needs to be overcome if CBA is to provide guidelines for mitigation policies.
Indeed, an important tradeoff has to be solved right after the accident, and concerns
the confinement or the emergency relocation of populations. A question for future
research is whether CBA can deal with this emergency. Indeed, the optimal mitigation scheme cannot be determined ex ante, as it requires ex post data such as the
plant impacted or the weather and its impact on the path of the radioactive materials
dispersed in the atmosphere.
The Economic Assessment of the Cost of Nuclear Accidents
93
into Mitigation Policies
Current research on cost assessment focuses on providing complete assessments by
identifying more and more consequences of an accident. This trend is necessary, but
is not adapted to mitigation policies. First, the theory of “sunk costs” [45] explains
that once a cost has been incurred, it is no longer relevant for decision making
regarding the future. In the case of mitigation policies, the capital losses due to the
destruction of a power plant are incurred at the time of the accident. Those losses
are an example of sunk costs, and should thus not enter the mitigation policy
decisions. Current estimates, as they account for all kinds of losses regardless of the
time at which they are incurred, cannot be used in the determination of mitigation
policies. This observation raises one question: can we expect cost assessments to
provide useful guidelines for mitigation policies?
We believe it can. Cost-benefit analysis (CBA) of countermeasures could provide at least three useful insights regarding mitigation policies. First, it was shown
by the report on the consequences of Chernobyl that countermeasures are costly
[32]. Cost-benefit analysis could thus help determine which countermeasures are
most efficient by comparing their costs to society with the valuation of the prevented damage. Second, there are numerous countermeasures that address the same
harmful consequences. Some measures are substitutes (emergency relocation and
confinement), while others are complements (iodine prophylaxis and confinement).
Hence the assessment of their costs and benefits could help policy-makers identify
tradeoffs or synergies when implementing several countermeasures. Finally, the
consequences of a nuclear accident do not happen all at once. Cost-benefit analysis
is thus a good tool to search for the optimal inter-temporal allocation of mitigation
resources.
This kind of assessment is already carried out in other hazardous activities such as
car accidents or biosecurity [46, 47]. In the case of nuclear power, Munro studied the
tradeoff between long-term relocation and land decontamination. As radioactive
decay reduces the cost of land decontamination over time, he calculated the optimal
decontamination date which occurs approximately ten years after the accident [48].
Other studies also focus on particular tradeoffs between countermeasures, namely
land decontamination and food restrictions [49, 50]. Yet, these studies focus on
multi-criteria decision making rather than on performing a CBA of countermeasures.
Existing studies that deal with mitigation only focus on long-term countermeasures. Being able to deal with emergency countermeasures is a barrier that
needs to be overcome if CBA is to provide guidelines for mitigation policies.
Indeed, an important tradeoff has to be solved right after the accident, and concerns
the confinement or the emergency relocation of populations. A question for future
research is whether CBA can deal with this emergency. Indeed, the optimal mitigation scheme cannot be determined ex ante, as it requires ex post data such as the
plant impacted or the weather and its impact on the path of the radioactive materials
dispersed in the atmosphere.
The Economic Assessment of the Cost of Nuclear Accidents
93