Economic models of compensation for damage caused by nuclear accidents: Some lessons for the revision of the Paris and Vienna Conventions

In this paper the economic analysis of accident law is used to examine the liability for nuclear accidents. It is argued that the classic system of individual liability of a nuclear power plant operator with a financial cap on compensation and individual insurance by national pools is not effective. The current system leads to a too low compensation for victims and lacks an adequate internalization of the nuclear risk. Hence, it is argued that the economic analysis of law can provide useful insights for the revision of the Paris and Vienna Conventions on the liability for nuclear accidents. It is also argued that higher amounts of compensation can be generated only if the idea is accepted that all plants share the costs of an accident wherever it occurs. This could be realized through a mutual pooling system. Such a system could also be fitted into the revision of the Paris and Vienna Conventions.