External costs of electricity generation

Abstract

Internalizing of external costs leads to a better allocation of economic resources, and so to an improvement of welfare. However, if the external effects that can be quantified and monetized are added to the internal costs, the cost relations between different electricity generation systems are not necessarily changed. Of course, the underlying assumptions (like dose-response relationships) are very uncertain, and some external effects that could be important cannot be monetized. However, statements of other authors that with certainty quantifiable external effects are high (of the order of magnitude of the internal costs) can be relativized.