A decision analysis of the U.S. breeder reactor program

Past modelling efforts have failed to reach a consensus on breeder R and D strategy. These failures have led some to question the usefulness of benefit-cost analysis for a problem as complex and as politicized as this one has become. The present paper examines some of the major weaknesses of past benefit-cost analyses and then reformulates the breeder investment decision in a decision tree framework. Decision analysis is used to evaluate alternative R and D strategies that range from accelerating the current effort to abandoning the entire program. Breeder benefits are assessed through ETA-MACRO, a model of interactions between the energy sector and the rest of the U.S. economy. A dynamic non-linear optimization procedure is used to examine how breeder timing could depend upon alternative assumptions with respect to: (a) uranium supply, (b) energy demand growth, (c) environmental constraints upon coal and shale oil production, and (d) the availability of alternative energy sources. (author)