The economic impacts of the Fukushima disaster
Japan's Ministry of Economy, Trade and Industry (METI) has revised the estimated cost of decommissioning the Fukushima Daiichi nuclear plant, and compensating victims of the disaster, to around ¥21.5 trillion (US$187 bn; €175 bn).1
In 2011/12, the estimate was in the range of ¥5 trillion2 to ¥5.8 trillion.3 In November 2012, TEPCO said compensation and clean-up costs could amount to ¥10 trillion.2 In 2013, METI estimated the cost at ¥11 trillion4, comprising ¥5.4 trillion for compensation (now estimated at ¥7.9 trillion), ¥2.5 trillion yen for decontamination work in Fukushima Prefecture (now estimated at ¥4 trillion), ¥1.1 trillion for interim storage facilities for contaminated soil (now estimated at ¥1.6 trillion), and ¥2 trillion for decommissioning the Fukushima Daiichi plant (now estimated at ¥8 trillion).1,5
The current estimate of ¥21.5 trillion is four times greater than the 2011/12 estimates of ¥5‒5.8 trillion, and double the 2012/13 estimates of ¥10‒11 trillion. Further increases are likely. "We don't think it will increase further for some time, but it's possible depending on any changes to the situation," METI chief Hiroshige Seko said on December 9.1 According to Nikkei Asian Review, costs could "surge" if the removal of nuclear fuel fragments from stricken reactors proves more difficult than expected.1
In October 2016, the Japanese government said that expenditure on decommissioning the Fukushima plant would rise from the current figure of ¥80 billion (US$690m) per year to several hundred billion yen (several billion US dollars) per year.6
Indirect costs ‒ fuel imports
In addition to the direct costs discussed above, the Fukushima disaster has resulted in a myriad of indirect costs. While a number of these indirect costs cannot be quantified, it can safely be said that the largest has been the cost of replacing power from Japan's fleet of idled reactors. Replacement power has comprised energy efficiency negawatts, increased use of renewables, and increased use of fossil fuels.
According to METI, fossil fuel import costs to replace power from idled reactors amounted to ¥3.6 trillion (US$31.3 bn) in fiscal year 2013.7 It's a reasonable assumption that comparable costs have been incurred for each of the 5.5 years since the Fukushima disaster. And since nearly all of Japan's reactors remain idle, a reasonable (if arbitrary) assumption is that comparable costs will be incurred for another three years, bringing the total to 8.5 x US$31.3 billion or US$266 billion.
Adding the estimate of US$187 billion in direct costs to the rough estimate of US$266 billion for fuel imports gives a total of US$453 billion. That figure is consistent with the American Society of Mechanical Engineers' (ASME) "rough estimate" in a mid-2012 report of US$500 billion costs from the Fukushima disaster.8 ASME estimated costs for clean-up and decommissioning of the Fukushima plant; clean-up of contaminated lands outside the plant boundary; replacement power costs due to the shutdown of all of Japan's reactors; and compensation for citizens evacuated from contaminated areas. ASME noted that the costs would "substantially increase if nuclear electricity generation continues to be replaced for a long time by other means".
The ASME report concluded: "The major consequences of severe accidents at nuclear plants have been socio-political and economic disruptions inflicting enormous cost to society. In other words, even when there are no discernible radiological public health effects from a nuclear power accident, the observed and potential disruption of the socio-economic fabric of society from a large release of radioactivity is not an acceptable outcome."8
METI noted in its April 2014 Strategic Energy Plan that electricity prices have risen as a result of strategies to replace nuclear power in the aftermath of the Fukushima disaster: "Six Japanese electric power companies have already revised their electricity prices by a range of 6.2% to 9.8% for regulated sectors. However, actually, the model electricity price for the average household has risen by around 20% across Japan due to the rise in fuel price, etc."7
The 2014 METI report further noted that increased electricity prices have had flow-on effects: "Increases in electricity prices due to various factors have put pressure on the profits of energy intensive industries and small and medium-sized enterprises and are starting to cause adverse effects, including personnel cuts and production transfer to overseas due to deteriorating profitability for domestic business. It is a significant obstacle to expand domestic investment from abroad; it also increases burden against household economy."7
Thus, as the METI report notes, the Fukushima disaster and the subsequent shutdown of all of Japan's reactors have had macroeconomic impacts: "Due to increased imports of fossil fuels, Japan's trade balance in 2011 turned to a deficit for the first time in 31 years. In 2012, the trade deficit expanded, and in 2013, it hit a record high of ¥11.5 trillion. Japan's current account has also been significantly affected by the deterioration in the trade balance. The increased imports of fossil fuels have thus caused problems not only in the field of energy but also at the macroeconomic level."7
Other indirect costs
The Fukushima disaster has cost the tourism industry billions of dollars ‒ perhaps tens of billions. According to an estimate by the Japan National Tourism Organization, 6.2 million tourists visited Japan in 2011 ‒ a 28% drop from the previous year.9
Billions more have been lost in the agricultural and fishing industries. The local fishing industry collapsed as a result of the Fukushima disaster. According to a June 2013 Reuters report, fishing industry losses by that time amounted to ¥1.26 trillion (US$10.9 billion).10
Add these costs to the direct clean-up costs of US$187 billion (almost certain to be upwardly revised ... again), and the rough estimate of US$266 billion for fuel imports, and it's likely that the direct and indirect costs resulting from the Fukushima disaster will exceed US$500 billion.
1. Nikkei Asian Review, 10 Dec 2016, 'Japanese consumers will be paying for Fukushima for decades', http://asia.nikkei.com/Politics-Economy/Policy-Politics/Japanese-consume...
2. AFP, 7 Nov 2012, 'TEPCO says Fukushima clean up, compensation may hit $125 bn', www.nuclearpowerdaily.com/reports/TEPCO_says_Fukushima_clean_up_compensa...
3. Kyodo, 27 Aug 2014, 'Fukushima nuclear crisis estimated to cost ¥11 trillion: study', www.japantimes.co.jp/news/2014/08/27/national/fukushima-nuclear-crisis-e...
4. Reuters, 28 Nov 2016, 'Fukushima nuclear decommission, compensation costs to almost double: media', www.reuters.com/article/us-tepco-outlook-idUSKBN13N03G
5. Nikkei Asian Review, 9 Dec 2016, 'Fukushima cost estimate set to swell to $188bn', http://asia.nikkei.com/Politics-Economy/Policy-Politics/Fukushima-cost-e...
6. South China Morning Post, 25 Oct 2016, 'Cost to scrap Fukushima nuclear plant massively underestimated, Japanese officials admit', www.scmp.com/news/asia/east-asia/article/2039929/cost-scrap-fukushima-nu...
7. Ministry of Economy, Trade and Industry, April 2014, Strategic Energy Plan', www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/4th_strategic_en...
8. American Society of Mechanical Engineers, June 2012, 'Forging a New Nuclear Safety Construct: The ASME Presidential Task Force on Response to Japan Nuclear Power Plant Events', www.asme.org/getmedia/73081de8-e963-4557-9498-f856b56dabd1/Forging_a_new...
9. Japan Times, 9 March 2012, 'Selling Japan's Food and Tourism after Fukushima', www.realclearworld.com/2012/03/09/selling_japans_food_and_tourism_after_...
10. Antoni Slodkowski / Reuters, 3 June 2013, 'Rising radioactive spills leave Fukushima fishermen floundering', http://planetark.org/enviro-news/item/68817
Costing Fukushima morbidity and mortality
The impacts of the Fukushima disaster include ill-health and deaths resulting from radiation exposure and from the evacuation of 160,000 people and the prolonged exclusion from contaminated areas.
Putting a dollar value on ill-health and death is both fraught and arbitrary. With those qualifications, figures used by the US Nuclear Regulatory Commission (NRC) can be used to cost the ill-health and death resulting from the Fukushima disaster.
The NRC, in its own words, "uses the dollar per person-rem conversion in cost-benefit analyses to determine the monetary valuation of the consequences associated with radiological exposure and establishes this factor by multiplying a value of a statistical life coefficient by a nominal risk coefficient."1
The NRC suggests a value of $5,100 per person-rem of radiation exposure (US$510,000 per person-Sievert).1 The UN Scientific Committee on the Effects of Atomic Radiation estimates radiation exposure from the Fukushima disaster at 48,000 person-Sieverts.2,3 Multiplying the exposure (48,000 person-Sieverts) by the (fraught, arbitrary) NRC figure of US$510,000 per person-Sievert gives a total of US$24.5 billion.
The NRC suggests a figure of US$9 million for each death caused by radiation exposure (in the jargon, US$9 million is the 'value of a statistical life' or VSL).11 A reasonable ball-park estimate is that 5,000 deaths will result from exposure to radiation from the Fukushima disaster (using a Linear No Threshold-derived risk estimate, almost twice the risk estimate used by the NRC).3 Multiplying the US$9 million VSL figure with the estimate of 5,000 deaths gives a figure of US$45 billion.
In addition, there have been ill-health and deaths attributable to the Fukushima disaster but not directly radiation-related, in particular the impacts of the evacuation and prolonged exclusion from contaminated regions. According to reports in early 2014, information compiled by police and local governments found that 1,656 people had died in Fukushima Prefecture as a result of stress and other illnesses caused by the 2011 disaster.4
If we assume that the number of non-radiation-related deaths has risen from 1,656 by early 2014 to, say, 2,000 deaths up to late 2016, and we use the NRC's US$9 million VSL figure, that gives a cost of US$18 billion.
Regardless of those fraught, arbitrary costings of morbidity and mortality, there's no disputing the American Society of Mechanical Engineers' conclusion that the Fukushima disaster has resulted in an "enormous cost to society" and that the "disruption of the socio-economic fabric of society from a large release of radioactivity is not an acceptable outcome".5
1. US Nuclear Regulatory Commission, Aug 2015, "Reassessment of NRC's Dollar Per Person-Rem Conversion Factor Policy: Draft Report for Comment", www.regulations.gov/contentStreamer?documentId=NRC-2015-0063-0005&dispos...
3. Ian Fairlie, Feb 2014, 'New UNSCEAR Report on Fukushima: Collective Doses', www.wiseinternational.org/nuclear-monitor/785/new-unscear-report-fukushi...
4. The Times (UK), 21 Feb 2014, 'More Fukushima victims die of stress than were killed in the disaster', www.thetimes.co.uk/tto/news/world/asia/article4012190.ece
5. American Society of Mechanical Engineers, June 2012, 'Forging a New Nuclear Safety Construct: The ASME Presidential Task Force on Response to Japan Nuclear Power Plant Events', www.asme.org/getmedia/73081de8-e963-4557-9498-f856b56dabd1/Forging_a_new...