Consequence of Risk Aggregation: A Forgotten Lesson from the Fukushima Disaster

Abstract

A key lesson from the 2011 Fukushima nuclear disaster has been largely ignored. The Fukushima disaster highlighted the consequence of aggregating (accumulating) risk. With six reactors within a 3,5 km2 site, the Fukushima Daiichi Nuclear Power Plant (NPP) was one of the extreme examples of aggregating risk in a small area. As a result of the 2011 Tōhoku earthquake and the following tsunami, core damage (nuclear meltdown) occurred at all three operating reactors at the facility. A multi-reactor facility poses more risk to human health and the environment than a single-reactor facility. Risk aggregation increases the need for mitigation and insurance. But these factors are ignored in the design of NPPs and other facilities. A larger facility places a greater burden of the risk on the government (taxpayers). Whenever possible, the risk should be distributed rather than concentrated. The risk that remains after mitigation is known as the residual risk. There is a cost associated with the residual risk. Whether this cost is borne by the owner or the taxpayers, it should be a factor in the design of a facility. Currently, there are no disincentives to the aggregation of risk in small areas.