Wednesday, August 06, 2008

Siting New Nuclear Power Plants: The Coase Theorem at Work?

The New York Times reports today that there may be as many as 34 new nuclear plants built in the U.S over the next decade. Nuclear power offers global environmental benefits (less greenhouse gases per unit of power generated) but imposes local environmental costs on the communities close to the new plants (extra radiation risk). Who will be the "lucky" communities where these power plants will be built? We used to nuclear test in Nevada rather than Manhattan because nobody lived in the former. Regional migration to the Sunbelt has altered this equation.

If local communities have the right to veto the placement of a nuclear power plant close to them, how will such communities be "bought off" or more politely compensated for taking the extra risk and providing public goods (less global warming) for the rest of us? Will Berkeley, California allow a nuclear plant to be built here? This is a nuclear free zone. Will cambridge, MA?

I'm eager to see more urban planners get involved in research on how to handle this issue that we will need to site plenty of new power plants, wind turbines and solar panels and they will take up a lot of land. We will need transmission lines to run from these to the grid. Which land should be used for this purpose? Do you trust the market to make these decisions? Do you trust local government?

The market of course would place the new sites where land is cheap to purchase. Are you okay with this allocation or would you prefer to site the new power plants on Bill Gates' land?