Of black swans, wetlands, nuclear power and worst-case scenarios
|Thursday, 6. May 2010 2 comment(s)||
The oil spill that has hit the U.S. coast and further threatens large swathes of the coast from Louisiana to Florida is a tragic accident, with extensive social, environmental and economic consequences. The extent of the oil flow has already exceeded the British Petroleum worst-case scenario and overwhelmed the private sector’s ability to respond to it. The final costs of the disaster are at the moment literally incalculable.
The accident and its repercussions are an excellent example of a Black Swan: The accident and its repercussions are on the one hand a surprise to many observers, yet in retrospect everyone knew such an accident was only a matter of time. As a black swan event, the accident will also have a broad impact on society and politics for years to come.
What does this imply for Finland? The lessons of the Deepwater Horizon disaster are many, including potentially new techniques and technologies for handling a future oil-tanker disaster near our shores. However, from a Black Swan perspective there is a particularly striking consideration:
As Finnish parliament debates giving permits to new nuclear power-plants, the fact that BP’s worst-case scenario was exceeded should give some pause. Ultimately, because BP described it as unlikely or virtually impossible that such an accident would occur, it did not plan for the eventuality. Worst case scenarios routinely underestimate the likelihood and impact of events, because they are often based on probabilistic calculations built around what are commonly known as bell-curves. No one can say what the probability of a nuclear accident is, just like no one can say what the probability of Deepwater Horizon exploding was – but one day it just happened.
The lesson is not that we should stop using hydrocarbons or nuclear energy merely that worst-case scenarios built by companies with a vested financial interest – profit motive – are rarely truly the worst-case.
Texts reflect the opinions of the individual authors