If externalities are excluded, but fossil-fuel prices are assumed to remain high, nuclear generation of electricity is only marginally economical. (For helpful background, see The Future of Nuclear Power: An Interdisciplinary MIT Study .) The question whether to permit or encourage the construction of additional nuclear electrical generating plants therefore turns on the weight given the various externalities that such plants produce, both positive and negative.
On the positive side, emphasized by Becker, nuclear power is “clean”; unlike electrical generating plants that run on fossil fuels (coal, oil, or natural gas), nuclear plants do not produce any carbon dioxide or other greenhouse gas and therefore do not contribute to global warming. In contrast, electrical plants powered by fossil fuels are significant contributors to the atmospheric concentration of carbon dioxide and thus to global warming. However, even a marked expansion in the share of electricity produced by nuclear plants (currently about 20 percent of the world’s total) would have only a slight effect on global warming; for it would probably be decades before nuclear power substituted for fossil-fuel-burning plants on a large scale, and in any event reducing emissions of carbon dioxide merely slows—it does not reverse—the growth in atmospheric concentration of carbon dioxide, because the effect of emissions on that concentration is cumulative (except in the very long run): they would have to be reduced to zero, or even below zero, for the growth in atmospheric concentration to cease.
A second positive externality, also stressed by Becker, relates to our dependence on foreign oil (and natural gas), a dependence that would be somewhat lessened by substituting nuclear fuel for fossil fuels in the generation of electricity. Of course dependence on foreign countries for essential inputs is not problematic in itself; it is a condition of international trade. But there is concern that our dependence on oil supplied by countries that are unstable, potentially hostile to the United States, or susceptible to intimidation by terrorists ties our hands in dealing with such countries. This is a legitimate concern, but will not be significantly alleviated by building a few more nuclear power plants.
On the negative side, the traditional concern about nuclear power was the risk of a meltdown, such as occurred at Chernobyl. The danger created by nuclear plants built according to the latest designs is apparently quite trivial—provided that due care is used in construction, operation, and maintenance. That would not be a problem with nuclear plants built in the United States and other wealthy countries, but could be a serious problem with nuclear plants built in the Third World, perhaps including rapidly modernizing nations such as China, India, and Brazil.
There are other negative externalities of nuclear power generation, however. One relates to the disposal of the spent nuclear fuel. There are two methods of disposal. The one used in the United States is storage. Because of local objections to nuclear waste, spent nuclear fuel is currently stored at the site of the nuclear plant itself. This is worrisome partly because of limited on-site storage space but more so because the danger of theft by terrorists is greater the greater the dispersion of the material. Many other countries avoid the storage problem by reprocessing the spent nuclear fuel. But reprocessing produces as a byproduct plutonium, which is readily convertible to nuclear bomb material.
So the problem of disposal assumes truly serious form because of the threat of terrorism, and of proliferation of nuclear weaponry more broadly. Al Qaeda is known to have expressed interest in acquiring nuclear bombs; and the “dirty bomb” (a conventional explosive coated with radioactive material) seems an especially attractive terrorist device. The more nuclear power plants there are, the more weaponizable nuclear material there is, and so the greater is the threat of nuclear terrorism and proliferation. How much greater is difficult, probably impossible, to say.
The negative externalities of nuclear power plants built only in the United States and other wealthy countries are small (with a qualification noted below), for these countries have the resources and the political will and capacity to secure nuclear power generation against both accidents and attacks. But if the U.S. were to commit itself to expanding its own nuclear generating capacity, it would be difficult to limit such expansion in Third World countries, where safety, terrorism, and proliferation risks are all much greater. Notice also that if only the U.S. expanded its nuclear power production, the impact on global warming would be even slighter than I have assumed.
But I have ignored a factor that seems particularly significant in the United States. Distinct from the “real” negative externalities of nuclear power is the widespread exaggeration of what might be called the “normal” hazards of nuclear energy. The risk of a nuclear accident is one of those “dread” risks that people attach greater weight to than the actual expected cost created by the risk justifies. From an economic standpoint, however, stubborn fears, even when irrational, count as real costs, because they impose disutility; in any event, democratic politics give weight to public opinion whatever its rationality. The excessive fear of nuclear accidents seems related to the psychological association of nuclear energy with weaponry of unprecedented lethality and with to insidious operation of radioactivity (invisible, odorless, but deadly), producing monstrous offspring, etc. Americans’ general ignorance of science is no doubt a factor in exaggerating what I am calling the normal risks of nuclear energy.
I conclude that the case for actually subsidizing nuclear electrical generation has not been made. However, there is a stronger case for relaxing arbitrary regulatory barriers to the construction of new nuclear plants in the United States, provided that the widespread public fears of nuclear power can be overcome.