Chernobyl Disaster: Effect on Economy

  • 18 May 2020 | 2909 Views | By
Chernobyl Disaster: Effect on Economy

The world has progressed in the last hundred years in every possible way. With each new development, humans are living and enjoying a life which people of two generations back would have not thought of but this is only one side of the coin, the other side is not so pleasant. With the advancement of technology, millions of people have to suffer.

In this article, we are going to talk about one such accident which made millions believe – technology and science is a curse – The accident at the Chernobyl nuclear power plant.

On 26 April 1986, the world’s worst civil nuclear disaster happened in the city of Chernobyl in the former USSR. How big it was? The amount of radiation released was far greater than the one released in the Nagasaki or Hiroshima atomic bombs. As per some experts, it was 400 times more intense.

The Accident at Chernobyl

On 25 April, prior to a routine shutdown at the plant, the reactor crew at Chernobyl 4 began preparing for a test to determine how long turbines would spin and would be able to supply power to the main circulating pumps when the main electrical power supply is brought down. Early on 26 April, a series of operator actions, including the disabling of automatic shutdown mechanism started. The reactor was in an extremely unstable condition by the time the operator moved to shut down the reactor.

It caused the overpressure of the reactor and also caused the 1000 ton cover plate of the reactor to become partially detached. It ruptured the fuel channels and jammed all the control rods, which by that time were only halfway down. Intense steam was generated throughout the whole core which caused a steam explosion and released fission products to the atmosphere. A few seconds later, a second explosion threw out fragments from the fuel channels and hot graphite.

The fuel and graphite became incandescent and started a number of fires, causing the main release of radioactivity into the environment.

How bad was the Chernobyl Disaster?

Acute radiation syndrome (ARS) was originally diagnosed in 237 people who were working on-site and later were involved with the clean-up. It was later confirmed in 134 cases. Within a few weeks of the accident, 28 people out of these 237 died as a result of ARS. 19 more workers subsequently died between 1987 and 2004.

A 30 kilometers exclusion zone was put in place, forcing the evacuation of hundreds of thousands of people, many of whom have never been able to return. Dozens of towns and villages were left crumbling and abandoned.

What is the Overall Cost of the Chernobyl accident?

The Chernobyl nuclear accident, and the government policies adopted to cope with its consequences, imposed huge costs on the Soviet Union and three successor countries the Russian Federation, Belarus, and Ukraine. These 3 countries bore the brunt of the impact. Given the spread of radiation outside the borders of the Soviet Union, other countries were also impacted and had to bear economic losses.

The costs of the Chernobyl nuclear accident can only be calculated with a high degree of estimation, given the high inflation and volatile exchange rates of the transition period that followed the break-up of the Soviet Union in 1991 and non-market conditions prevailing at the time of the disaster. According to the International Atomic Energy Agency’s “Chernobyl’s Legacy: Health, Environmental and Socio-Economic Impacts” report, the total cost of the Chernobyl disaster was over $235 billion.

What were the consequences of Chernobyl?

Direct losses of fixed assets and other material goods when counted, summed the disaster amount to 9.2 billion Ruble between 1986 and 1989. The non-productive and productive fixed assets loss amounted to 900 million Rubles. Lost output in agriculture and other sectors amounted to about 1.2 billion Rubles. Expenditure on the social and cultural facilities, construction of housing, and services for the population affected by the Chernobyl disaster, road-building, measures to protect forests and water, decontamination operations, and the provision of gas supplies to settlements amounted to 2.94 billion Rubles. Various kinds of compensation were paid to the population amounting to 1.25 billion Rubles. Payment of cash benefits because of restrictions on the consumption of agricultural products from private plots and local farms amounted to 180 million Rubles.

Indirect losses represented an incomparably larger amount. The expenditure in question had been financed mainly from the State budget. Apart from budgetary allocations by the USSR State insurance agency, insurance payments have been made to individuals and agricultural and co-operative organizations in the amount of 274 million rubles. The total expenditure also included money contributed voluntarily by individuals and organizations to the assistance fund for dealing with the after-effects of the Chernobyl disaster in the amount of 532 million roubles.

Workers constructed a concrete and steel sarcophagus around Unit 4. This structure had weakened, so a permanent structure was built around it. Its cost was approx. $765 million.

The Economic Loss in the Local Areas

The area around the plant was mostly rural. The main source of income for the people before the accident was agriculture – in the form of large collective farms and also small individual plots (cultivated for household consumption and local sale). There were a few factories around the area mainly of food processing and wood products.

Agriculture was the worst hit by this accident. A huge area of land consisting of 784,320 hectares of agricultural land was removed from service and, timber production was halted for a total of 694,200 hectares of forest.

The production has remained possible in many areas because of remediation efforts, but it came with a higher cost of products since it meant higher use of additives, fertilizers, and special cultivation processes. Even though safe products were being developed/cultivated by the locals, the consumers rejected the products from the affected areas. Because of this “branding” issue, the food processing industry was severely hit. Revenues from certain types of production declined, agricultural activities had fallen, and some facilities had closed altogether.

Damage Control by the Government

The government did come up with policies to protect the population against radiation exposure by limiting agricultural production and giving resettlement. However, it had a negative impact on the economy.

Wages were lower and unemployment was higher in the affected areas than they were elsewhere. This is in part the result of the accident and its aftermath, which imposed limitations on agricultural production, forced the closure of many businesses, added costs to product manufacture, and hurt marketing efforts. The other problem created was that the proportion of small and medium-sized enterprises (SMEs) was far lower in the affected regions as compared to other regions. The main reason for this was that many educated and skilled workers, especially the younger ones, had left the region, and partly because — in all three countries — the general business environment discouraged entrepreneurship. Private investment was also low, in part owing to image problems, in part to unfavorable conditions for business nationwide.

How much did Chernobyl clean up cost?

Due to the conservative policies of the then government, actual cost of clean up could never be determined. Further, nuclear waste is not known to degrade in short time. This means that clean up can go even upto 6-7 decades or more. While the initial costing was at around $70 billion (when matched with levels as on 2019), the overall costing tends to breach $250 billion as on date. This figure shall increase, as the clean up process reaches its goal.

More than the clean up, the damage was done to the Union of Russia. It is arguably valid to consider Chernobyl as the prime cause (immediate cause) that resulted in downfall of the USSR.

The fall of USSR

According to Mikhail Gorbachev, former General Secretary of the Communist Party, Chernobyl nuclear disaster was the real reason for the collapse of the Soviet Union five years later. He had introduced Glasnost, a policy of increased openness to the West and another policy Perestroika, a restructuring of the Soviet economy.

He tried to cover up the disaster but failed and failed cover-up exposed the unwillingness of the ruling party to be truly honest and the hypocrisy of Glasnost. It damaged his reputation as a reformer and the fact that the low-quality standards were followed at a nuclear plant, there was a lack of safety equipment and lack of evacuation system gave the impression to the people that they were not safe with the Soviet Union.

In this way, it was Glasnost that brought down the Soviet Union and it was Chernobyl that spurred Mr. Gorbachev on to accelerate the process in the years to come.

What Countries did Chernobyl effect?

Ukraine government still spends 5 to 7 percent of government spending each year on Chernobyl-related programs and benefits. If you consider the total amount of spending by Ukraine after the dissolution of the Soviet Union, it caused the country to lose at least a decade in terms of economic development.

Even Belarus was impacted severely. The government spends 22.3 percent of the national budget on the Chernobyl related issues in 1991 which by 2002 declined to 6.1 percent. Belarus had spent more than the US $ 13 billion on Chernobyl between 1991 and 2003. There was a huge cost of initially moving over 100,000 residents and later another quarter of a million on the economies of Belarus, Ukraine, and Russia and they were unable to bare the load, especially after the collapse of the Soviet Union.

Chernobyl Today

The three units started operation in 1986 but by 2000 all were shut down. Some residents have returned to their homes. The only positive from the accident is that the wildlife has flourished. The number of animals has increased in the area. However, human life can never be the same in that area.

Could Chernobyl have been prevented?

After a disaster happens, measures that could have prevented it tend to get prime importance. Nuclear fission is a complicated task and there are several parameters that are to be monitored 24X7X365. A team of experts managed the Chernobyl reactors, which, along with the presence of emergency systems could have prevented or lessened the effects of the disaster.

Abandoned Reactor at Chernobyl. Image source: pixabay
Abandoned Reactor at Chernobyl. Image source: pixabay

While every accident is deemed as a case that can be prevented, the real-time circumstances do project a different story.

A comparison with other Nuclear Disaster

On 11 March 2011, Fukushima Daiichi Nuclear Power Plant in Japan exposed a lot of people with radiation, which was triggered by a tsunami that followed a massive earthquake. As a result of tsunami and earthquake, the plants were without external power and the generators were flooded. It caused a catastrophic decay heat casualty, leading to major reactor plant damage including meltdowns and explosive loss of reactor containment.

The Fukushima nuclear accident, costing $210 billion did not create as much economic damage as Chernobyl. Though, it forced Japan to close 11 of its 50 nuclear reactors. It reduced the country’s electricity generation by 40%.

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