Friday 18 March

Today, Mohammad presents “Nuclear Energy: Revisited”

Japan’s quake and tsunami have shaken the world. One side is the current unbelievable misery of many and the other is the unfolding nuclear crisis. The impact of the latter on other countries and the way public perceives nuclear energy is getting clearer as the news is getting out of pipeline:

Germany has already put on hold its politically tricky decision to extend the life of its nuclear plants. Recently China has announced a pause in its ambitious plans for nuclear growth (27 reactors under construction). (The Economist)

Probably these countries are asking: if even Japan—so well-organized and disciplined, so well prepared for disaster and so experienced in nuclear power—can come so close to catastrophe, what nuclear risks are their own countries running?

We all know the virtues of nuclear energy: very low co2 emissions and cheap energy. But what do we know about the costs of nuclear energy? Have Japanese disaster taught us something we didn’t know? Are we going to see a more cautious expansion of nuclear energy or this is just a bleep? After all, what are the alternative energy sources for Japan?

In a broader perspective, how do individuals take into account “low-probability but catastrophic” events? There are a few papers in Economics trying to explain asset market puzzles by incorporating rare catastrophes (e.g. Barro (2009) AER).

Some related articles on this:

http://www.economist.com/node/18395981?story_id=18395981

http://www.economist.com/node/18388874?story_id=18388874

Some statistics about nuclear dependence and also a more technical account of what happened in Fukushima: http://www.economist.com/node/18398734?story_id=18398734