Part 2 of 2 Parts
     The new NEA report proposed what they call a circular approach to a decision-making framework. In this approach, all the elements of the system can vary while continuing to feed into each other. The adequacy of funding is assed by considering whether decision-making processes are actually capable of taking into account changes in critical parameters in a manner that is sufficiently robust and sophisticated to align and realign them in different patterns. These critical parameters will include the envisioned technical solution and its costs, constituted assets and rates of return, as well as the licensed lifetimes of nuclear power reactors and evolving preferences of society.
      The report raised the theme of incentive compatibility in the sense that funding arrangements should be as cost-effective as possible in the long term in order to make them more politically and socially sustainable in different OECD countries. “Clearly, there is a wide range of solutions as national circumstances differ greatly both in economic and technical terms with respect to the historical allocation of responsibilities and social preferences.”
     The NEA said that their report was inspired by a branch of economics referred to as Law and Economics. This branch links general economic notions of efficiency and cost minimization in a flexible and non-dogmatic manner to the working on institutions and the allocation of legal responsibilities. It is often focused on the optimal allocation of responsibilities, the alignment of incentives and risk management.
     The approach taken by the report suggesed that financially, socially and politically sustainable funding arrangements will need to take into account two fundamental guiding principles. First, the parties that are best capable of managing the costs and risks related to decommissioning and radioactive waste management should ultimately be the ones responsible for the funding. Second, decommissioning and especially waste management concern commitments that reach far into the future for many centuries. The report said, “It is obvious that economic, political and technical framework conditions both on the asset and on the cost side will change over these period.”
     The report goes on to say, “As long as commitments for disbursement are far away, maintaining a narrative of stable parameters can be a useful intermediate step to set up funding systems. However, as soon as real disbursements loom, the accuracy of estimates can no longer be taken for granted. In other words, funding frameworks will increasingly need to integrate the conscious and explicit management of change in a sustainable rhythm.”
     The NEA pointed out that funding systems are already regularly reviewed to check whether they satisfy particular financial requirements. However, it stated that long-term sustainability also demands periodic reviews of the technical options and their likely costs, liability locations and institutional arrangements.
      Many of the existing frameworks in NEA countries already respect these two guiding principles to varying degrees according to the report. “The adequacy of financing for decommissioning and radioactive waste management is a major issue that receives significant policy attention. The case studies show that sophisticated and by and large well-funded systems are in place and that much good work is being accomplished, although frequently in an ad hoc and implicit manner, rather than in a systematic and explicit one.”