Integration of risk aversion in the evaluation of the external cost of a nuclear accident

Full text of publication follows: the external costs of fuel cycles used in the production of electricity are those imposed on society and environment that are not accounted for by the producers and consumers of energy. Within the evaluation of the external cost of the nuclear fuel cycle, the evaluation of a nuclear accident has to be addressed. For this purpose, the basic approach consists in calculating the expected value of various occident scenarios. the main criticism of this approach is that there is a discrepancy between the social acceptability of the risk and the average monetary value which corresponds in principle to the compensation of the consequences for each individual of the population affected by the accident. The aim of this paper is to propose a methodology for the integration of risk aversion, relying on the expected utility approach, as well as a numerical application based on the French data for the external cost of a nuclear accident. Although a huge range of values has been published for the relative risk aversion coefficient, it seems reasonable to adopt a value of 2 for the specific case of nuclear accident. This leads to an estimated multiplying coefficient approximately equal to 20 to be applied to the expected external cost of a nuclear accident corresponding to a release of about 1% of the core. In this case, the external cost of the nuclear accident is estimated to 0.046 mECU/kWh (i.e. about 50% of the total external costs of the nuclear fuel cycle estimated at 0.1 mECU/kWh with a 3% discount rate), instead of 0.0023 mECU/kWh without taking into account risk aversion. (authors)