How Much Internalization of Nuclear Risk Through Liability Insurance?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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 efficiency-enhancing. Terms of use: Documents in

Dependence of flood risk perceptions on socioeconomic and objective risk factors

“…A similar fraction gave a recurrence interval larger than 10,000 years, which represents a very small perceived flood probability. Overall, pessimistic beliefs about the flood probability outweigh optimistic beliefs, which is in accordance with the findings of other studies [ Camerer and Kunreuther , 1989; Schneider and Zweifel , 2004]. These results are further consistent with findings in the behavioral economics and psychological literature that individuals overestimate low‐frequency risks when these are expressed as a probabilistic metric [ Hurley and Shogren , 2005].…”

“…Asking for a return period rather than a probability may be easier for respondents as judgments under uncertainty are generally improved when risks are expressed in frequencies rather than probabilities [ Gigerenzer and Hoffrage , 1995]. A logarithmic scale of return periods was used as a visual aid, as by Schneider and Zweifel [2004]. It was explicitly stated that respondents could answer any return period, even if it was not on the scale.…”

Spatial effects in willingness to pay for avoiding nuclear risks

“…All coefficients of product attributes (coverage, nowaste, blackout, outlay, outlay 2 ) with the exception of damage show the expected sign and are highly significant, indicating that respondents were (on average) willing to make tradeoffs among the different attributes. Furthermore, the relative magnitudes of marginal utilities associated with product attributes are intuitively plausible, and they are quite in line with Schneider and Zweifel (2004). Note that coverage measures the increase in insurance coverage in percentage points, whereas nowaste is an all-or-nothing variable indicating whether or not there are any problems regarding nuclear waste.…”

“…Respondents were also told that nuclear power plants were already mandated to have liability insurance but that coverage fell far short of possible financial loss in case of a major accident. A more detailed description of the questionnaire can be found in Schneider and Zweifel (2004) and is available from the authors.…”

“…In Schneider and Zweifel (2004) we estimated respondents' willingness to pay for increased insurance coverage against nuclear risks but did not take the spatial dimension of respondents' preferences into account. However, respondents evidently make their choices in our experiment after having set their optimal level of self-insurance through their residential choice.…”