The Economic Assessment of the Cost
of Nuclear Accidents
Romain Bizet and François Lévêque
Abstract This paper discusses the obstacles that hamper robust estimations of the
cost of nuclear accidents. From an economic standpoint, risks of accidents are often
quantified by the assessment of an expected cost; that is the product of a monetary
loss by its probability of occurrence. In the case of nuclear power, this definition is
inadapted. Estimating the probability of a nuclear disaster is subject to high
uncertainties, and so is the assessment of its monetary equivalent. This paper first
discusses the two specific challenges in estimating the probabilities of nuclear
accidents: these accidents are too sparse to identify frequencies of occurrence with
probabilities; they are also dreadful, which makes risk-aversion a complex phenomenon. This paper then focuses on the assessment of nuclear damage. The large
discrepancies exhibited in the existing literature arise from three sources: the scope
of the assessments, the conflict between the use of past data or PSA studies in the
assessment of radiation damage, and the methods that are used to quantify
non-monetary welfare losses.
Keywords Probabilistic analysis Á Dreadful event Á Cost assessment Á Monetary
valuation Á Nuclear countermeasures
1 Introduction
Resilience has been defined as the ability of a society facing an extreme event to
react, adapt to its new environment and recover from the damage incurred. If
economics is not a priori well suited to discuss the short-term reaction or
decision-making processes of people facing extreme events, it nonetheless offers
R. Bizet (&) Á F. Lévêque
CERNA-Centre for Industrial Economics, MINES ParisTech/PSL-Research University,
Paris, France
e-mail: romain.bizet@mines-paristech.fr
F. Lévêque
e-mail: francois.leveque@mines-paristech.fr
© The Author(s) 2017
J. Ahn et al. (eds.), Resilience: A New Paradigm of Nuclear Safety,
DOI 10.1007/978-3-319-58768-4_7
79
of Nuclear Accidents
Romain Bizet and François Lévêque
Abstract This paper discusses the obstacles that hamper robust estimations of the
cost of nuclear accidents. From an economic standpoint, risks of accidents are often
quantified by the assessment of an expected cost; that is the product of a monetary
loss by its probability of occurrence. In the case of nuclear power, this definition is
inadapted. Estimating the probability of a nuclear disaster is subject to high
uncertainties, and so is the assessment of its monetary equivalent. This paper first
discusses the two specific challenges in estimating the probabilities of nuclear
accidents: these accidents are too sparse to identify frequencies of occurrence with
probabilities; they are also dreadful, which makes risk-aversion a complex phenomenon. This paper then focuses on the assessment of nuclear damage. The large
discrepancies exhibited in the existing literature arise from three sources: the scope
of the assessments, the conflict between the use of past data or PSA studies in the
assessment of radiation damage, and the methods that are used to quantify
non-monetary welfare losses.
Keywords Probabilistic analysis Á Dreadful event Á Cost assessment Á Monetary
valuation Á Nuclear countermeasures
1 Introduction
Resilience has been defined as the ability of a society facing an extreme event to
react, adapt to its new environment and recover from the damage incurred. If
economics is not a priori well suited to discuss the short-term reaction or
decision-making processes of people facing extreme events, it nonetheless offers
R. Bizet (&) Á F. Lévêque
CERNA-Centre for Industrial Economics, MINES ParisTech/PSL-Research University,
Paris, France
e-mail: romain.bizet@mines-paristech.fr
F. Lévêque
e-mail: francois.leveque@mines-paristech.fr
© The Author(s) 2017
J. Ahn et al. (eds.), Resilience: A New Paradigm of Nuclear Safety,
DOI 10.1007/978-3-319-58768-4_7
79