Working Paper BETA #2011-14

Download working-paper

Title : Nuclear Waste Disposal in France : the Contribution of Economic Analysis

Author(s) : Jean-Alain Héraud, Oana Ionescu

Abstract : This article addresses the following question: How to deal with uncertainty, emergence of new information and irreversibility in the decision process of the long-term disposal of radioactive waste? Intuitively, one might think that measures taken today are more relevant when they are ‡exible. We show that the theoretical economic insights supplements this intuition and more precisely we emphasize the real options theory as one means of valuing ‡exible strategies in the disposal of highly radioactive waste. Moreover, we argue that the optional approach must involve a more complex utilization in the recently developed French project of reversible repository given the presence of multiple disposal stages.

Key-words : Radioactive waste, Real options, Reversibility

JEL Classification : D81, Q40, Q50.