Safety, risk and nuclear power

30 November, 2006

It has been pointed out by many people, including on this blog by Sacha (quoting James Lovecock), that nuclear is much safer than pretty much any source of power for electricity. The relevant comparison was that per Terawatt-year of electricity generated there are 342 deaths for coal, 885 deaths for Hydro, 85 deaths from Natural Gas and only 8 for Nuclear. This comparison appears to be using a low figure for the Chernobyl accident as the WHO finds around double that number of deaths directly to the Chernobyl accident, but even so that brings the total to 16 per TWy, still well less than the next most safe method, Natural Gas. Hydro rates poorly due to some severe accidents with dams bursting in India that have killed in the thousands each.

Death of course is not the only risk associated with nuclear. Thousands more have had thyroid cancer directly as a result of Chernobyl although most have been treated and over 99% have recovered it is still a cost to bear. Then there is the contamination of land and the wholesale abandonment of the surrounding area. Also this is not to mention that we don’t really have much historical data to base our estimate of how bad or how frequent a meltdown can be. Still if we look at the total historical human costs and average over all the power that has successfully been generated by nuclear the human cost still comes out as being low, certainly lower than coal power.

If that is the case then isn’t it rational that we should adopt nuclear on the basis of safety? What that kind of comparison misses out is that people regard riskier situations as different to less risky situations for similar expectations. Thus although most nuclear power plants will sit there quite happily not hurting anyone, the rare one that does is potentially extremely hazardous. It is reasonable to treat this volatile outcome as much more serious than the equivalent. We do after all routinely pay away money to insurance companies when we would be better, on an expected outcome basis, to save the money ourselves.

If we believe that nuclear is not just a bit safer (in terms of deaths) than other forms of electricity but significantly safer, then surely this is enough to outweigh our risk aversion? I would say yes, but I could quite easily understand others coming to the no conclusion as well even if they were fairly well informed of the facts and the true risks.

That said I believe it is clear that many people over estimate the risk of nuclear compared with other risks that they don’t even consider or take for granted. On the other hand its also seductively easy to look at nuclear power’s track record in the west and do the reverse. It’s easy to believe there are no black swans if you’ve never seen one. We know catastrophic accidents are rare, but have we been lucky or unlucky seeing as few as we have seen?

Can we have nuclear power without bipartisan support?

21 November, 2006

The key sticking factor in developing a nuclear industry would seem to be the political risk. Would any company take on the risk of building a nuclear power plant while the likely alternate government is opposed to the plan?

With a construction lead time of 10-15 years, this is likely to encompass at least one change of government, and a likely 2 full rotations of the senate. Without significant financial guarantees it is difficult to see why any company would take on the risk of having a billion dollar venture, with a high likelihood of crashing down on change of government. As the report summary states on page 10:

An efficient and predictable regulatory process is an essential prerequisite for a nuclear power
industry. With its high capital costs, nuclear power is very sensitive to delays and uncertainty in obtaining approvals.

While this is mostly talking about governments altering the requirements, an opposition hostile to the very idea would seem to pose an even greater risk. This means the government initiating the deal would essentially need to tie some sort of financial guarantee into the project. While a policy reversal for the ALP once construction has begun would not be out of the question, the chance that they may decide to roll back these changes as well makes it a very risky regulatory environment.

Personally I think this is a shame, as we should have all options on the table to reduce CO2 emissions and nuclear is still one of the few viable base load power sources.

Update: Of course the political risk is not only federal but also regional, with several States already coming out and saying they would fight it in the courts, although given the recent WorkChoices decision it appears unlikley they would win according to this report.

Draft nuclear report

21 November, 2006

The draft report of the Uranium Mining, Processing and Nuclear Energy Review has been released and is available in whole and parts here. I haven’t yet been able to read the documents, but from the summaries appearing in the news they aren’t telling us anything that wasn’t already known. In short that nuclear is more expensive than coal in Australia, and only becomes cost effective if we put a price on carbon emissions. With regards safety, it finds it to be safer than other energy industries, and poses no additional nuclear proliferation risk.

I’ll try to comment when I actually read more of the report.

Inheritance Tax

14 November, 2006

If nothing is certain except death and taxes, why not get them out of the way at the same time? I’ve often wondered why an estate or inheritance tax is not used in Australia. To me it seems a logical and comparatively fair way of performing the burden of taxation. Income taxes make generating wealth more difficult, so why not shift the burden off those actually generating new wealth and place it increasingly on to those who are getting it merely due to chance of birth?

Surely raising taxes this way is more efficient? Taking it off those who have windfall gains rather than those who are actually generating the most must be more efficient. In principle I can’t see any arguments against it that don’t also apply to income tax. I can understand there may be considerable practical difficulties in actually doing this, but this does not seem to be the reason people are against it.

So can anyone give me a good reasons for not having an inheritance tax in exchange for lower income tax? Or is it just a fantastic idea that we should go back to?

Winds of change or just more hot air?

14 November, 2006

First it was Rupert Murdoch “The planet deserves the benefit of the doubt.”, then Peter Costello on insiders

I think the ground is changing. I think it is important that we bring new countries into this discussion. And I think, from Australia’s point of view, if the world starts moving towards a carbon trading system, we can’t be left out of that, that Australia has a role…

and now John Howard

JOHN HOWARD has yielded to pressure to consider a global carbon trading scheme, and business leaders say they are ready to take action against global warming.

As Brian has noted at LP, the release of the Stern review has coincided with a sudden shift in the political direction with respect to AGW policy. Previously the Australian government position has been completely intransigent on being involved with carbon trading, but with Peter Costello’s interview on insiders and now this announcement it seems there has been a large shift in government opinion. Even if this is not a complete reversal it is a serious concession that Australia and the rest of the world needs to do more.

Earlier in the year the government used a review of the tax system as a stepping stone on the way to reversing its previously stated opposition to cutting top tax rates. Here’s hoping this review is the same, a facing saving exercise before a policy reversal and not just more hot air.

Confusion over water trading

9 November, 2006

Tucked away at the bottom of this article about Australia taking up nuclear power is this bizarre statement about water trading which kind of demonstrates why people should think carefully before commenting outside their area of expertise.

Water and irrigation experts remain unsure about whether any of the measures decided on at Tuesday’s meeting of state and Commonwealth leaders would free extra water.

Peter Schwerdtfeger, emeritus professor of meteorology at Flinders University’s Airborne Research Centre, said he agreed that overallocation of water needed to be stopped, but with “precious little else” that the meeting decided on.

“Water trading as it stands now is an evil nonsense. It has allowed the fallacious belief to develop that water can be sold either upstream or downstream without any consequences.

“Water that is sold to NSW will not flow downstream and the bed of the Murray may dry out. It is not environmentally or economically viable.

“Water trading only works if you have a surplus of water … why don’t we encourage people to use water more efficiently?”

It could be that Prof. Schwerdtfeger has been taken out of context or misquoted, but it seems more likely that he doesn’t understand the basic point that trade, by putting a market price on water it implicitly results in it being put to the most more efficient uses.

I don’t think that anyone is under the illusion that water is a commodity that can be traded “without any consequences”. Environmental flows must be maintained, losses when trades occur over long distances and such are all issues, but hardly irreconcilable ones. Most importantly is trading is more important when there is scarcity, its barely necessary if you have surplus. Prof. Schwerdtfeger may be an expert in climatology, but when he’s talking about trading, I don’t think he has a clue.

Hypocrisy, relativism and the Diamond Age

8 November, 2006

Hypocrisy is a poorly regarded activity as Ted Haggard, a US pastor who has admitted to having gay sex could tell you. Criticism and focus of most stories about this case has concentrated mostly on his anti-gay views and the inherent hypocrisy.

Hypocrisy is defined as “a feigning to be what one is not or to believe what one does not; especially : the false assumption of an appearance of virtue or religion”. While it’s clear that Haggard hasn’t met the virtuous standards he has espoused it’s also not clear that he is feigning his belief in those standards. People following their instincts rather than doing what they believe is right is not uncommon.

A passage in Neal Stephenson’s SF book The Diamond Age, has an interesting take on hypocrisy espoused by one of characters, one of the leaders of a group known as “Neo-Victorians”.

You know, when I was a young man, hypocrisy was deemed the worst of vices,” Finkle-McGraw said. “It was all because of moral relativism. You see, in that sort of a climate, you are not allowed to criticise others-after all, if there is no absolute right and wrong, then what grounds is there for criticism? … Now, this led to a good deal of general frustration, for people are naturally censorious and love nothing better than to criticise others’ shortcomings. And so it was that they seized on hypocrisy and elevated it from a ubiquitous peccadillo into the monarch of all vices. For, you see, even if there is no right and wrong, you can find grounds to criticise another person by contrasting what he has espoused with what he has actually done. In this case, you are not making any judgment whatsoever as to the correctness of his views or the morality of his behaviour-you are merely pointing out that he has said one thing and done another. Virtually all political discourse in the days of my youth was devoted to the ferreting out of hypocrisy. Read the rest of this entry »

Minimum wages

7 November, 2006

I’ve been thinking and reading recently about the value of minimum wages. From what I’ve read most economic theory is against minimum wages on the ground that it increases unemployment. There is a fairly obvious argument with regard the fact that a minimum wage will price out people who would otherwise be able to get a job at a lower wage because, while their labour still has value to an employer, its less than the minimum allowable by law and they are thus shut out of the market.

Under this rationale a minimum wage may mean that some workers may get paid more, but they do so at the expense of those who would otherwise work. The minimum wage therefore creates unemployment and makes poorer those who would otherwise work.

I’ve no doubt that there is truth in this. Certainly if you raised the minimum high enough then it would undoubtedly cause unemployment.

On the other hand even if you could pay people 1 cent per hour the real effective minimum wage is considerably higher than that due to the training/management/hiring costs in your own time not to mention getting a decent return on any capital you may have invested for the employee to use and this is even if there was no other regulations on employment. A minimum wage below a certain point is going to have minimal impact on unemployment.
Read the rest of this entry »

Institutions and Empire

3 November, 2006

As a maths nerd with an interest in history I find attempts to actually quantify various historical effects extremely interesting, even if they are ultimately often flawed. This article in The Economist shows how economists, or really more accurately statisticians, are trying to sort through various historical outcomes to measure the value of different institutions as an explanation for wealth and poverty.

Of the many proposed solutions to that riddle (technology, geography, the Protestant ethic) the current favourite is rather bland in the abstract: “institutions”. In rich economies institutions—meaning the formal laws and unwritten rules that govern society—function rather well on the whole. In poor ones they don’t. That much is indisputable.

What is tricky is showing that good institutions are a cause of economic progress rather than a by-product of it. You cannot run controlled experiments in which a particular institution is randomly imposed on some countries, but not on others, in order to compare how they fare. Or at least economists can’t. But perhaps imperialists can. Maybe the colonial adventures of the past provide the natural experiments economists need to put their theories to the test.

What is ingenious about the recent economic studies of empire is how they overcome this problem. Imperial institutions may determine prosperity, but the reverse may also be true. The trick is to find some third factor that is securely linked to institutions, but entirely unconnected to economic success. Such factors are called “instrumental variables”, because the economist is interested in them not for themselves, but for what they tell him about something else.

That name, however, now seems quite ironic. Because all of the fun in the recent spate of papers is in the instruments themselves. Economists are outdoing each other with ever more curious instruments, ranging from lethal mosquitoes to heirless maharajahs, or, most recently, wind speeds and sea currents.

It has often been said that you were better off being colonised by the British than say the Spanish and Portugese and in general the studies bear this out. Although also pointing out that it wasn’t necessarily a positive.
Read the rest of this entry »

PNG’s Foreign Aid

2 November, 2006

This threat by the PNG government to suspend government aid they were receiving is quite remarkable and potentially telling.

PAPUA New Guinea is threatening to dramatically reduce the money it receives from Canberra, suspend all official visits by Australians or impose onerous travel restrictions, and recall its high commissioner.

If no satisfactory response is forthcoming, PNG will retaliate, instituting a range of measures that promise to create havoc for Australia’s $300 million annual aid program to PNG.

The most serious step being contemplated is the suspension of significant elements of Australian aid deemed not essential to PNG, the Herald understands.

Normally its a threat to not pay aid, rather than not receive it, which kind of suggests that PNG thinks Australia regards the influence they are getting as more valuable than the aid money. Rather than charity it is money spent in the national interest. It will be interesting to see how the Australian government reacts to such a threat and whether it is a massive misjudgement on the PNG government side.

Of course it should be noted, that the aid could still be good for the people of PNG, even if the government rejects it because they resent the influence it grants to Australia.


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