The Insidious Economic Effects of Japan’s Nuclear Disaster
By: John Browne
Mar 23, 2011
While the world’s attention has been focused on the physical destruction wrought by the Japanese earthquake and tsunami, the desperate attempts to contain the fallout from the shattered Fukushima Daiichi plant, and the daunting problems that Japan faces in rebuilding its infrastructure, few have truly illustrated how long-lasting and widespread the radiation’s effects may be. There has also been little mention of how large radiological events affect economies of countries outside the immediate fallout zone. In truth, the disaster could make as much of an impact on investors in New York, London, or Sao Paolo as it makes on an investor in Tokyo.
The world’s most significant nuclear accident occurred 25 years ago at Chernobyl, Ukraine. Although its effects are now well-documented, many forget how thoroughly the damage was covered up at the time. To avoid panic, the Soviet authorities grossly downplayed the risks to those living near the plant, as well as those who lived hundreds, and even thousands, of miles away. In the months that followed, high levels of radiation were detected as far away as Scotland!
While we can hope that the present-day Japanese are more prone to candor than the Cold War-era Soviets, a series of botched and contradictory communications from Tokyo Electric Power, the operator of the plant, and the Japanese government have given us reasons to worry.
As higher levels of radiation are found in Japanese fish and vegetables, there is a growing suspicion that the full effects of the radioactive release have been downplayed to the public. It is becoming increasingly impossible to keep the concern from spreading beyond the islands of Japan. Pacific fishing companies and mainland Asian agricultural concerns are under heavy scrutiny.
The accident will inevitably alter long-term energy planning around the world. The growing political traction that nuclear power has gathered over the last decade or so, as the price of fossil fuels has climbed, may be irrevocably damaged. With so-called “green” energy unable to replace the wattage that will be lost by a waning nuclear sector, look for the traditional fossil fuels to fill the breach. But the effects of Japan’s nuclear accident go beyond health and energy policy.