Progress Energy announced this month that they would begin the process towards building a new nuclear power plant near Raleigh. The Raleigh N&O explains the regulatory tradeoffs that power plants must consider (Surge in Nuclear Power Likely):

If Progress Energy wanted to build a new coal-fired plant, that facility's pollution would likely push the utility over its federal limit for certain air pollutants unless the output were offset by shutting down older plants, adding more controls or buying pollution allowances, said Dana Yeganian, a Progress Energy spokeswoman.

In addition, utilities are facing the prospect that carbon dioxide emissions may one day be taxed or limited, which could increase the cost of building or operating a new coal-fired plant. That makes nuclear power more attractive.

One cost of a nuclear power plant is the expected losses *(i.e., risk)* from a nuclear meltdown (think Three Mile Island):

... William Schlesinger, dean of the Nicholas School of the Environment and Earth Sciences at Duke University, said nuclear power should be considered, but it needs to be weighed carefully because even a mishap at a nuclear plant can have large consequences.

He said a radiation release akin to the 1986 accident in Chernobyl in the former Soviet Union would render areas of the Triangle uninhabitable for 10,000 years.

"That to me is a very sobering thought," Schlesinger said. "You don't have to look farther than Russia to see that played out." [*]

Risk perception researchers have found that when dealing with low probability, high loss ~~risks~~ *events* (like nuclear accidents), people don't handle ~~expected values~~ *risks* very well [risk = p x Loss; where p is the probability of the event happening]. People tend to overestimate the probability of the bad event and focus on the potential high loss.

For example, here is what Greenpeace has to say:

The nuclear industry and the Nuclear Regulatory Commission (NRC) have always maintained that the probability of an accident was low. Even if we were to take the nuclear industry or the NRC at its word, the risk of a meltdown would still be great because the consequences of such an event are potentially so devastating.

~~Doh! Wrong guys: The risk of a meltdown is independent of the devastating consequences.~~ *But the large negative consequences must be weighted by the low probabilities. Let's try some numbers. *

A simple estimate of the annual ~~risk~~ *probability* of a nuclear meltdown (which is worse than a nuclear accident *and less likely* [think Homer Simpson]) is the ~~ratio of the~~ number of accidents divided by the product of the number of nuclear plants and the number of years of operation. There have been two nuclear accidents in the history of the world: Three Mile Island and Chernobyl (Wikipedia says that there have been five other potential meltdowns). The denominator of the ratio is about 12,000 (obtained from an "ignorance is bliss" naive Google search, better estimates are welcome). Therefore, one estimate of the probability of a nuclear accident is 0.000167 or a 1 in 6000 annual chance.

To put this in perspective, suppose there was a 1 in 6000 chance that the U.S. loses 1% of its annual GDP (1% of $12 trillion is $120 billion). The ~~expected loss~~ *risk*, given a 0.000167 probability is about $3.33 million (Dan Kolb's annual salary). *The present value of the risk in perpetuity (which is longer than 10,000 years) at a 2% discount rate is $166.5 million. This is a big number, for sure, but less overblown than some would say. *

Let's hope that when we're considering the risk tradeoffs that we appropriately weight the losses by the probabilities. The *expected* loss*risk* of a nuclear plant near Raleigh is not a Chernobyl, as if it were a sure thing, but something much, much lower.

*Note: Ah, the worst case scenario? well thanks, Dr. Schlesinger, I find that to be extremely helpful. [sarc]

Update: Strikethroughs and italics were added on March 25, 2008 [see "My bad (with comments)"].