How Much Internalization of Nuclear Risk Through Liability Insurance?

Yves Schneider () and Peter Zweifel ()
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Peter Zweifel: Socioeconomic Institute, University of Zurich

No 211, SOI - Working Papers from 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.

Keywords: risk; nuclear energy; liability insurance; internalization (search for similar items in EconPapers)
JEL-codes: D62 D81 Q48 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2002-09
References: View complete reference list from CitEc
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Published in Journal of Risk and Uncertainty 29(3), 2004, pages 219-240.

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https://www.zora.uzh.ch/id/eprint/52169/1/wp0211.pdf First version, 2002 (application/pdf)

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Journal Article: How Much Internalization of Nuclear Risk Through Liability Insurance? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0211

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