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.
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