Last post I talked about the externalised cost of insurance and what that insurance should cost. I don't know if it came across but I put the insurance cost in the *best possible* light.
This post I'll look quickly at a more likely cost to insure and what the cost of going uninsured would really be.
Firstly I halved the number of nuclear meltdowns. I ignored the reported accidents, didn't mention the fact that accidents in Japan and communist countries are generally never reported. It's unlikely that any insurance company would be so generous and I estimated the number of required plants assuming that the load is constant when it actually fluctuates and that they produce power 100% of the time when it's actually about 75%. I also ignored the new failure mode of nuclear power plants that has only existed for the past couple of years. Software attack of the control systems. http://en.wikipedia.org/wiki/Stuxnet Previous accidents have relied on humans to make errors. For instance turning off all the safety systems (Chernobyl) or failing to take into account likely natural conditions (Fukushima) or setting fire to the control systems (Three Mile Island). Now dedicated self replicating software has been written and released specifically targeted at nuclear facilities. The likelihood an attack of this type is difficult to estimate. However, given that there have already been successful attacks carried out by this method in the 2 years that it has existed then one might conclude that the likelihood is quite high, at least as high as human error.
So just running those more realistic figures. Rather than 30 plants, probably 70 are really needed. Rather than 2 containment breaches lets assume 4. Add another 4 by software attack. 15000 reactor years, divided by 70 plants, divided by 8 breaches comes to a major containment breach predicted to average every 27 years. We're still ignoring the 25 odd reported accidents that didn't catastrophically breach containment but did release radioactive materials. To carry the risk an insurer is going to want to get at least twice the insured amount during that 27 year period. Previously I estimated the cost of evacuating Sydney (or Melbourne by inference) at 4 T$. That's a pretty conservative estimate really. New York lost one city block 10 years ago. Despite hanging their national pride on rebuilding, not a single office space has been completed in the intervening decade. I think it's safe to assume that the rebuilding of an entire city would take at *least* 10 years. During which time the workers of the city should have their lost wages covered. The average wage in NSW is 65 000 per year and roughly half the population are wage earners. So that's 2 million times 65 000 times 10 years. 1.3 T$ for lost wages alone. Compensation for lost business for companies would have to be at least that much, another 1.3 T$. The people would need to be housed and fed during that time as well, another T$ gone there. Then you'd need to build a new city, 4 T$ there or compensate people for their lost homes and businesses, and you'd still need to build them new infrastructure in whatever places they ended up, so the cost would be similar. So that's near as makes no difference to 8 T$. To cover that risk the insurers would want around 16 T$ every 27 years. About 600 G$ a year or 60 000 dollars a year for every wage earner in Australia. Alternatively you could charge an extra 3 dollars per kWh consumed. Almost all that money would go to off shore insurers and Australia would go bankrupt quick smart as it's about 2/3rds of our GDP.
The other alternative is to externalise the risk to the public of Australia. So we know roughly what the risk is. Somewhere between my two estimates of once every 27 years and once every 250 years. Personally I think it's closer to the 27 years than the 250. So what is the hazard? Well evacuating a capital city. But what does that mean to the average person in Australia? Let's say for a moment you're not actually evacuated... All good then? Somebody Else's Problem? Ok, for a start every business in Australia is connected in some intimate way with the capital cities. If you suddenly evacuated Sydney for example, all the major local corporations would go broke all at once. The international ones would leave. The banks have huge amounts of money tied up in property and business loans. About half the property they have lent on would instantly be worth nothing and the people who owed them the money would have no jobs. So all the banks would fold and take all your savings with them. The stockmarket would fall over as most corporations went into receivership, so your superannuation would be worth nothing. No-one would be able to borrow money and millions of people would put their properties up for sale as they had no money or job, so your property value would fall to virtually nothing. It's almost certain that the government, suddenly unable to raise tax and gifted with 4 million homeless unemployed people, would start to print money like mad. Expect hyperinflation to destroy any money you have under the mattress and reduce your wage (should you still have a job) to virtually zero.
Fun! But it gets better...
Food in Australia has some of the longest distances from farm to plate and some of the most oil intensive and corporate owned agriculture in the world. With the Australian dollar in freefall the corporations all broke and no foreign exchange with which to buy oil, food production would stop as would food transport. Expect food riots.
That's if you're not one of the evacuees. Imagine how much fun they would be having.