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 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 "commons."

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?

Where our reactors are located, ca 1998:

The percent share of each country’s energy needs that are supplied by nuclear power plants, ca 1998.

Three Mile Island, Middletown, PA

The economic theory of environmental costs: 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

A simple picture shows the market as a circle around supply and demand. The side effect can be any harm (or benefit). An externality in theory:

An externality in reality? An archive photo.

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?

Is this kind of thing really possible?

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”.

However: 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.

Positive gradient (hypothetical)

Negative gradient. (hypothetical)

What researchers found: Neutral gradient (actual).

Pilgrim—Plymouth., Mass. Ginna—Rochester, NY Millstone—Waterford., CT Oyster Creek--NJ Plus Three Mile Island again. One other study confirmed this with 4 other plants:

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 Colleagues at Penn State Harrisburg did research on the human reactions to the TMI accident.

Middletown days: Self & relatives at TMI.

The campus was also in Middletown and near TMI.

Robbin Hough, coauthor. Hough taught at Oakland University in MIS and Econ from early 1960s to Robbin had assembled data suitable to make and initial study. He "amassed" data.

We were aware of some drawbacks of the gradient approach: 1. The selected 20 mile radius may be too small. 2. TMI was arguably safer after the accident. 3.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 (cross-section) PerCent drop in land value A drop in land prices was observed in each of the single year data sets.

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 loses: 640*5000*10% =$320,000

Conclusion: 1.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.