Evaluating Policies to Attain the Optimal Exposure to Nuclear Risk

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dc.contributor.author EBERL, Jakob
dc.contributor.author JUS, Darko
dc.date.accessioned 2012-09-14T11:43:57Z
dc.date.available 2012-09-14T11:43:57Z
dc.date.issued 2012
dc.identifier.issn 1028-3625
dc.identifier.uri http://hdl.handle.net/1814/23775
dc.description.abstract This paper describes how limited liability leads to risk-loving behaviour in nuclear power companies and unsafe nuclear power plants. By reviewing current regulatory regimes, we show that this issue is not being sufficiently addressed today. Therefore, we evaluate five regulatory instruments: (1) safety regulation, (2) minimum equity requirements, (3) mandatory insurance, (4) risk-sharing pools, and (5) catastrophe bonds. We conclude that none of these instruments in its pure form can be recommended. Thus, we propose a new approach that, in its core, consists of a two-stage procedure. In the first stage, capital markets assess the risk stemming from each nuclear power plant via catastrophe bonds. In the second step, the regulator uses this private risk assessment and intervenes by charging an actuarially fair premium in the form of a Pigouvian risk fee. Society ultimately acts as an explicit insurer for nuclear risk and is, on average, fairly compensated for the risk it is taking over. en
dc.language.iso en en
dc.relation.ispartofseries EUI RSCAS en
dc.relation.ispartofseries 2012/50 en
dc.relation.ispartofseries Loyola de Palacio Programme on Energy Policy en
dc.subject nuclear risk-taking en
dc.subject limited liability en
dc.subject catastrophe bonds en
dc.title Evaluating Policies to Attain the Optimal Exposure to Nuclear Risk en
dc.type Working Paper en


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