The proposal for a South Australian high level nuclear waste dump places too much risk on future generations, argues economist Richard Blandy.
The Nuclear Fuel Cycle Royal Commission delivered its tentative findings on 15 February. It is seeking responses to these findings up until 18 March. I intend to submit this article to the commission for its consideration.
The only aspect of the nuclear fuel cycle that received the Royal Commission’s support in its tentative findings was the storage and disposal of used nuclear fuel, entirely from overseas, obviously. The Royal Commission described such an integrated storage and disposal facility as “likely to deliver substantial economic benefits to the South Australian community”.
I believe that the Royal Commission has got this wrong and that South Australia should not use part of its land mass as a dump for highly radioactive used fuel from overseas nuclear reactors (called “high level waste”) which, in the Royal Commission’s own words, “requires isolation from the environment for many hundreds of thousands of years”.
But how can we compare the value of net benefits 20 years or more into the future with costs that we are having to meet immediately? Clearly, distant events have less value to us now than immediate events do: the promise of $100 in 20 years’ time is worth less than $100 in your hand right now (if you don’t believe this, I would like to borrow $100 from you today and repay you $100 in 20 years’ time!).
At some time in the future, it doesn’t matter what annual net benefits the bridge is yielding to its users, because those benefits are effectively worth zero as far as we are concerned today. It is this sum of “discounted” benefits that is compared with the cost of the bridge to see whether this sum of benefits exceeds the cost or not. If this “present value” of the benefits exceeds the costs, the bridge should be built; if not, the bridge should not be built.
The Royal Commission suggests that this discount rate is 4 per cent per year – a rate which the Royal Commission calls the “intergenerational discount rate”, although there is no consensus among economists on what such a rate is or should be. Many economists believe that in circumstances where multiple generations are involved, the intergenerational discount rate should be zero, or close to it, because we should give the impact of our decision on our descendants equal weight to its impact on us.
The problem with the high level nuclear waste dump is the inescapable risk (the Royal Commission says that “it is not possible to know the geological and climatic conditions in the distant future”) of severely adverse outcomes that we might be passing on to tens of thousands of future generations of South Australians.
If we rate their outcomes equally to our own (as we do with climate change, in fisheries management and bringing up children, for example), we should not proceed with constructing such a facility within our borders, whatever the up-front bonanza that we are promised, which may, indeed, be correct.
We should think of what we will leave to our descendants – and not do it.
Read more at Nuclear waste dump confounds cost-benefit analysis