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Does It Matter If You Live Next to a Nuclear Power Plant? based on articles in Land Economics , March 1991 and Journal of Regional Science November 2000. This session discusses environmental

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Does It Matter If You Live Next

to a Nuclear Power Plant?

based on articles


Land Economics, March 1991


Journal of Regional Science

November 2000

This session discusses environmental

costs of several types:

1. Cases of a threat without physical damage.

2. Cases of physical or emotional damage.

3. Cases of perceptions of harm to the


The nuclear power case is generally one

of threat without physical damage.

Its study is the source of what I have

learned about environmental costs of

all kinds.

My knowledge is economic knowledge;

I mean by this that it is limited both

to the sphere of economics and to my

own understanding.

Please be thinking about these questions

in addition to your own:

1. What harm can nuclear power do

and to whom?

2. Does the perception or prediction of

harm count as an environmental cost?

3. Do Americans really perceive any harm

or care about it?

The percent share

of each country’s

energy needs that

are supplied by

nuclear power

plants, ca 1998.

The economic theory of environmental


1. Some environmental costs are

normally incurred in economic

production--these need not be

inefficient uses of the environment:

E.g.: a. the woodcutter; b. the lumber mill,

c. the farmer clearing land; d. fishermen;

e. city builder and so on.

For economic theory, the key question is

whether the environmental costs are fully

incorporated into the costs of the product.

The idea: In such case, humanity is

recognizing its effects on the environment,

and provided also that markets are well-

functioning competitive markets--then

the environment is being properly employed.

The poet might put it this way:

We, too, are children of the universe,

we have a right to use the Earth's

resources just as do the other

living things.

So what is the problem? Is there one?

2. In economic theory, the environment

is misused when the damage is not

fully recognized and incorporated into

the economic costs we humans incur.

These problems are called

Detrimental Externalities.

Formally: An detrimental externality is a

harm caused by a market activity that

is non-monetary and is not compensated.

E.g: factory smoke--detrimental externality

acid rain--detrimental externality

labor costs--not an externality

materials costs--not an externality

compensated pollution--not an externality

An externality in theory:

A simple

picture shows

the market as

a circle around

supply and

demand. The

side effect can

be any harm

(or benefit).

Coase Theorem:

Externalities will tend to self-correct

when property rights are clearly defined

and transactions costs are minimal.

If these concepts define the environmental

costs of e.g. nuclear power, then

what are the costs in this case?

No! The scientists complain.

The Manhattan Project would

have been a piece of cake if

it were this easy.

An atom bomb requires large

yield conventional explosives

just to get things going—”implosion”.


1. A severe accident would spew

radioactive matter into the environment

damaging both humans and physical assets.

2. The nuclear waste material lasts a very

long time, is difficult to store safely, and

is nearly impossible to store politically.

A related question of interest to me:

1. Is an imagined threat properly

a detrimental externality?

2. Is a threat without battery considered

an assault under the law?

What do we know about Three Mile Island

the best known nuclear crisis in America?

Mainly that the distance “gradient” on house

prices was neutral around Three Mile Island

both before and after the accident.

Negative gradient.


What researchers found:

Neutral gradient (actual).

One other study confirmed this with 4 other plants:

Ginna—Rochester, NY

Pilgrim—Plymouth., Mass.

Oyster Creek--NJ

Millstone—Waterford., CT

Plus Three Mile Island again.

Didn't anyone care?

Do people even notice?

My background to this story.

1. Donna and I lived near TMI from August 1981

until August 1986.

2. Colleagues at Penn State Harrisburg did

research on the human reactions to the

TMI accident.

Hough taught at

Oakland University

in MIS and Econ

from early 1960s

to 2000.

Robbin had assembled

data suitable to make

and initial study.

He "amassed" data.

Robbin Hough,


  • We were aware of some drawbacks of the

  • gradient approach:

  • 1. The selected 20 mile radiusmay be too small.

  • 2. TMI was arguably safer after the accident.

  • Were residents really unconcerned? Instead

  • many residents had been terrified.

Our study found: Farmland with

a nuclear “neighbor” is worth about

10 (ten) percent less than elsewhere.

(We compared some 80 nuclear areas to some

410 nonnuclear areas over 11 years.)

Year of the data


PerCent drop

in land value

















A drop in

land prices



in each of

the single

year data


Bottom line:

Nuclear plants will drop your farmland value

by 3 to 4 percent on average.

and over 10 percent for many farm locations.

Imagine Farmer Kushinsky owns

section of farmland valued at

$5,000 per acre. A 10 percent

drop in per acre value means he


640*5000*10% =$320,000

  • Conclusion:

  • This cost is big enough to matter

  • for American energy policy.

  • 2. But, it’s not big enough to prove

  • that nuclear energy is the wrong

  • choice for us.