Wednesday, 16 March 2011

Nuclear power problems in Japan

Offsetting Behaviour argues People are strange in their reaction to the problems in nuclear power plants in Japan. Jeffrey Miron make a nice point on this issue as well.
[...] one point about nuclear power is beyond dispute: it always receives substantial subsidy from government. This consists of both direct payments toward the costs of building plants, along with insurance against full liability for accidents.

So a simple way to evaluate competing claims over safety is to eliminate both kinds of subsidy and find out whether the private sector really think nuclear power is profitable, if investors bear all construction and insurance costs.
Markets provide useful information, when they are allowed to work free of government interference. I do wonder just how many nuclear plant would be built in a truly free market.


Eric Crampton said...

None in NZ, until modular Thorium comes onstream. Till then I can't buy that we meet necessary scale economies.

Peter Metcalfe said...

My own opinion is that such plants require a shitload of time and a shitload of money to build. Then when they are operational, they flood the market with shitloads of power which reduces profitability by a lot.

So nuclear power in economic terms is a lot like the prisoner's dilemma. It's a nice thing to have but unlikely to be achieved without government bribes.