United States
Environmental Protection
Agency
Radiation
Office of
Radiation Programs
Washington. DC 20-160
EPA 520 1 89-015
June 1989
Economic Criteria
for Relocation
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Economic Criteria
for Relocation
Dr. Byron M. Bunger
Office of Radiation Programs
U.S. Environmental Protection Agency
Washington, DC 20460
1989
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FOREWORD
The Environmental Protection Agency is responsible for the
development of criteria for protection of the public from
radiation resulting from nuclear incidents and accidents. These
criteria are referred to as protective action guides (PAGs).
i
One consideration in the development of PAGs is the cost of
implementing protective actions.
This report provides background information on the social
cost of relocating households away from areas contaminated as a
result of a release of radioactive particulate material to the
atmosphere from an accident at a nuclear power plant. Results
of the analyses presented herein were used in the development of
PAGs for relocation.
Richard J. XSulmond, Director
Washington D.C. Office of/Radiation Programs
111
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CONTENTS
Page
Foreword . iii
1. Objective 1
2. Conditions and Approach 1
3. Costs of Relocating Household 4
3.1 Identification of Household Costs 4
3.2 Discussion of Household Costs 7
4. Cost of Business Closures . 12
5. Cost of Idle Government Facilities and Public
Utilities !;.... 13
6. Total Cost of Relocation 14
Reference. 16
Appendix A-l
A.I Derivation of the Cost of Relocation A-l
A. 2 Moving Costs (Cost Al) A-l
A.3 Loss of the Use of Residence (Cost A2) . . . . . A-4
A.4 Households Extra Living Costs (Cost A4) A-6
A.5 Extra Maintenance and Security Costs for
Vacant Property (Cost A5) A-6
A.6 Extra Travel Costs to Household (Cost A8). . . . A-7
A.7 Extra Travel by Others in the Region of the
Household (Cost A9) . A-9
A. 8 Cost of Lost Business Activity A-10
A.9 Cost of Lost Business Inventory A-12
A.10 Loss of Use of Local Government Facilities . . .
and Public Utilities A-12
References A-15
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ECONOMIC CRITERIA FOR RELOCATION
1. Objective
The purpose of a Protective Action Guide (PAG) for
relocation is to establish a restricted zone from which all
residents will be relocated to protect them from exposure to
radioactive contamination while their property is being
decontaminated. The relocation PAG is expressed in terms of the
projected dose from an [accidental release of radioactive
material. The PAG is used to establish the boundary of the area
to be decontaminated.
EPA establishes the relocation PAGs using a method which
incorporates both the risk of health effects and the cost of
avoiding risk by relocation. Using this method, all residents
receiving an exposure above a predetermined level are relocated
regardless of cost, but residents receiving lower exposure would
also be relocated if the benefits of relocation justify the cost.
The analysis performed here is to determine only the cost
of relocation. This cost is used elsewhere to investigate the
feasibility of relocation based on its costs and benefits
(EP-89).
2. Conditions and Approach
Evacuation is the immediate and urgent removal of people
from an area to avoid or reduce exposure, usually from the plume
itself or from high levels of deposited radioactive material.
Evacuation is expected to start soon after an accident at a
nuclear power reactor (within hours) and to last no-more than a
few days. Relocation, on the other hand, is the removal or
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continued exclusion of households from contaminated areas to
avoid chronic radiation exposure. All households relocated are
expected to be moved from their place of residence within a few
days of the decision to relocate, and to be on relocation for a
period of as much as a year. Many people evacuated immediately
after an accident will be converted to relocation status while
other people that were evacuated may be allowed to return to
their homes. Others who were not evacuated may be relocated.
The following conditions are expected to be met when a
pgpulation is on relocation:
1. An airborne plume has passed and left behind a deposit
of radioactive material.
2. The movement of occupants and their possessions was
carried out shortly after the decision to relocate and
was completed within a few days. The area from which
^people were relocated was established as a restricted
zone with controlled access.
3. Decontamination is to be carried out on property
outside, as well as inside, the restricted zone. In
particular, it is assumed that the extent of decon-
tamination required will be the same on a property just
outside the zone as on an adjacent identical property
within it.
4. Relocation of the population from an area halts
operation of all neighborhood retail and service
businesses (e.g., service stations, repair shops, and
other services based in fixed places of business) in
the restricted zone. These neighborhood businesses are
assumed to not be moved from the restricted zone.
Other industries (e.g., manufacturing, utilities, and
government) are assumed to continue to operate so long
as the doses to employees do not exceed occupational
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dose limits (i.e., independently of the Relocation
PAG). Therefore, the cost of relocation borne by the
commercial sector is assumed to accrue only from the
interruption of neighborhood retail and service
businesses.
The costs associated with the implementation of the PAG for
relocation is evaluated through a comparison of the social costs
of relocating an average household that is just inside the
restricted zone with the social costs of not relocating an
identical household that is just outside the restricted zone.
The comparison is made between average households at the margin,
immediately adjacent to the boundary of the restricted zone,
i.e., figuratively, between the last household included in the
restricted zone and the first house excluded from the restricted
zone. At the boundary of this zone, the difference in monetary
costs between relocating and not relocating is the monetary cost
assigned to the radiation risk experienced by the household that
is not relocated.
Specifically, consider the comparison of relocation of the
occupants of two similar residences of equal value at the time
of the accident that are on either side of a line established by
the relocation PAG. (Conceptually the two residences need not
be immediately adjacent to one another; they could be separated
by intervening streets, crop lands, open lands, forests, or
structures so long as the two houses being compared require the
same amount of decontamination using the same methods of clean-
up. However, the derivation is better conceptualized and the
geographic location of the line demarking the restricted zone is
more precisely determined if the two residences are thought to
be immediately adjacent to each other.) The relevant costs
associated with moving or not moving these households can be
divided into three components. The most obvious is the cost of
relocating or not relocating the households themselves. The
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second component is the cost of closure of community-based
retail and service businesses, and the third is the loss of
public facilities such as use of streets, schools, libraries and
parks, and public utilities such as electrical power, natural
gas, and telephone service. Although we will enumerate a
variety of costs for each of these three components, not all
will have to be explicitly evaluated, since in some cases costs
for the relocated household will be the same as those for one
that is not, and will not contribute to the difference between
the two. The objective is to determine the net difference in
the costs for the relocated and unrelocated households.
3. Costs of Relocating Household
3.1 Identification of Household Costs
The cost of relocating the households themselves is
considered, first. Assume that residence A is located just
inside the boundary of the restricted zone and residence B is
adjacent to residence A, but is just outside the boundary of the
zone. The occupants of residence A (household A) are relocated
and the occupants of residence B (household B) are not
relocated. Consider the costs associated with the relocation of
household A. It is reasonable to assume that residence A is to
be decontaminated and restored to use because it is at the
boundary of the restricted zone and, therefore, not severely
contaminated. The costs associated with the relocation of
household A and the decontamination of residence A are:
Al. The costs of moving occupants A and their possessions
(excluding large furniture and appliances) to temporary living
quarters outside the restricted zone, and back to their
residence after its decontamination. This includes the monetary
value placed on the risk of accidental injury or fatality during
the moves.
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A2. The loss of the use of residence A during the time
household A is on relocation.
A3. The loss in the monetary value of residence A as a
result of having been contaminated. This loss is caused by the
perception of risk from residual levels of contamination still
present after decontamination. It is a permanent loss.
A4. Any extra cost on the part of household A in
maintaining the standard of living formerly provided by
residence A. This cost derives from the fact that residence A
I
can be assumed to have provided the services desired by its
occupants at the lowest possible cost.
A5. Extra cost of maintenance and security for residence A.
Extra maintenance is anything above the normal upkeep needed to
maintain the residence. This stems from the extended length of
the vacancy of residence A. Extra security is everything above
the normal level of police services and protective measures
needed to protect residence A against fire, theft,- and vandalism
while it is unoccupied.
A6. The cost of decontaminating residence A, including all
associated monitoring costs.
A7. Any emotional pain and suffering experienced by
household A resulting from having been relocated.
A8. All extra travel costs imposed on household A due to
having been relocated.
A9. All extra travel costs imposed on those residing in
the region surrounding the restricted zone as a result of adding
residence A to the restricted zone.
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A10. The true health risk due to the levels of
contamination on the property from the time of return of the
occupants to their residence through the remaining useful life
of residence A. This health risk is based on the true level of
contamination rather than the perception of risk by occupants of
residence A.
Although the occupants of residence B are not relocated,
there are costs associated with the decontamination and cleanup
of this residence. Most qf these costs are equal to or
comparable to a cost incurred by household A. The equal, or
comparable cost is identified where appropriate. They are:
Bl. The loss in the monetary value of residence B as a
result of having been contaminated (even though at a low enough
level that the household is not relocated). This permanent loss
in value is caused by the perception of risk from residual
levels of contamination still present after decontamination (as
discussed below, this cost is judged to be equal to cost A3).
B2. The cost of decontaminating residence B, including all
associated monitoring costs (offset by cost A6).
B3. Any emotional pain and suffering resulting from the fear
of radioactive contamination experienced by household B as a
result of not having been relocated (similar to cost A7).
B4. The true health risk to household B due to the
radioactive contamination for the period of time from the
beginning of relocation (for household A) through decon-
tamination of residence B and on to the end of relocation (for
household A). It is assumed that residences A and B are both
decontaminated before the end of relocation for household A.
B5. The true health risk to household B due to the
contamination for the period of time from the end of relocation
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(for household A) through the remaining useful lifetime of
residence B. This health risk is based on the true levels of
contamination rather than the perception of risk by occupants B
(offset by cost A10).
The costs described above are summarized in Table 1.
3.2 Discussion of Household Costs
The risk of accidental injury or death as a result of the
two moves caused by relocation is very small and the associated
monetized value can be neglected (part of cost Al). Other costs
of moving household A hare related primarily to transportation of
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household members and their possessions (except for large
furniture and appliances which are assumed to remain at the
residence).
Cost A2 cannot be evaluated independently of costs A3 and
A6. In estimating the loss of use of residence A (cost A2), the
dollar value of the loss accounted for should be based on the
market value of the property after the accident, but prior to
decontamination. This may be evaluated as the value of the
residence after decontamination has taken place, less the cost
of decontamination. Due to the perception of risk from any
residual contamination that will remain after decontamination,
the market value of residence A after decontamination must be
adjusted downward.
The loss of use of residence A also includes the loss in
consumer surplus derived from the property. There is reason to
believe that some of the amenities and externalities derived
from the-neighborhood and environment that contribute to the
consumer surplus may be temporarily (or even permanently) lost
after the accident. (This loss would be due to such things as
the disruption of the neighborhood due to the accident, possible
loss of continuity of the neighborhood caused by condemnation
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Table 1: Relocation Cost Categories
Cost category
Applicability
Residence A Residence B
(Relocated) (Not Relocated)
Cost A5
Move the household
Loss of use of
residence until
decontaminated
Depreciation due
to accident and
resulting
contamination
Extra costs due
to higher cost
of services at
new residence
Extra cost of
maintenance ^and
security for vacant
property
Decontamination of
residence
Emotional stress
Travel costs due to
having been relocated
Travel costs due to
an increase in the
size of the
restricted zone
Health risk to house-
holds from radiation
exposure
(a) During relocation No cost
Cost Al. Round trip for
family and most possessions
Cost A2. True cost but
basis to be adjusted to
account for costs A3 and A6
Cost A3 which is the
same as cost Bl
Cost A4
Cost A6 which is the
same as cost B2
Cost A7 from relocation
Cost A8
Cost A9.
No cost
No cost
Cost Bl
No cost
No cost
Cost B2
Cost B3 from
exposure to
radiation
No cost
No cost
(b) Fold owing
relocation
Cost A10 which is the
same as cost B5
Cost B4
Cost B5
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and withdrawal from use of some property within the restricted
zone, and lingering fears resulting from the fact an accident
actually has occurred.) Although some consumer surplus would be
restored to household A after their residence is decontaminated,
it is doubtful that there would be any consumer surplus
derivable from residence A during the period of relocation if
household A were to remain in it rather than relocate. This is
because it may be argued that household B, which does not
relocate, probably derives little or no consumer surplus from
its residence during the period of relocation. The neighborhood
of residence B is severely disrupted due to the relocation of
neighbors and friends,1] and the closure of local streets and
businesses. In additibn, there is general anxiety caused by
I
living in a radioactively contaminated area which reduces any
remaining consumer surplus. We conclude that household B
probably experiences a complete loss in consumer surplus during
the relocation period. Since residences A and B are side by
side, they could be expected to experience similar losses in
consumer surplus. Therefore, the loss in consumer surplus to
household A during relocation is assumed to be zero.
The result is that cost A2 is determined by subtracting the
estimated loss in value due to residual contamination (cost A3)
and the cost of decontamination (cost A6) from the before market
price for residence A. This cost continues for the duration of
relocation.
Costs A3 and Bl are the losses in the values of the houses
resulting from the perception of risk from residual
contamination. These are assumed to be identical. Even though
the true levels of risk are expected to be quite low, it is
anticipated that these risks will be perceived to be much
larger than they really are, and will, therefore, result in
substantial loss in the value of each residence. Although it
may appear that the inclusion of both these property losses and
the true risks from residual contamination (costs A8 and B5) is
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double counting, it is appropriate that they both be included
since the loss in property values probably has little
relationship to the true levels of risks and is believed to be
much greater than it would be if the true risks were the
determining factor.
It can be assumed that (at least within a few years) after
completion of decontamination residences A and B will be of
equal value. (Note that they are assumed to be of equal value
at the time of the accident.) Therefore, depreciation of
property values due to contamination (costs A3 and Bl) are
equal. Since these costs associated with residences A and B
are equal, they are not needed for the comparison of costs for
residences A and B. (Note that this does not negate the need to
evaluate cost A3 in order to evaluate cost A2, as previously
discussed).
It is=pfobably impossible to estimate the loss due to
residual contamination without empirical evidence based on an
actual accident. We have arbitrarily assumed a value in the
evaluations presented in the appendix.
The extra expense that would be required to maintain the
standard of living formerly provided by residence A (Cost A4) is
a social cost. It is primarily related to price increases in
housing due to increased occupancy in areas outside the
relocation zone and to the inability to find a replacement
residence, while on relocation, that fits the household's needs
as well as residence A.
The extra costs of maintenance and security (cost A5) are
estimated separately. The annual maintenance cost of a vacant
property is arbitrarily assumed to be twice the annual cost of
routine repairs. Cost of extra security is estimated to be
equal to the additional premium charged for insuring vacant
property. (Note that we are only interested in the cost of
10
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maintaining security at residences with low levels of
contamination. Costs for basic security for the heavily con-
taminated areas are not a component of relocating household A.)
Decontamination costs (costs A6 and B2) are assumed to be
equal, and consequently are not needed for the comparison except
for determining the reduced value of residence A (Cost A2) as
discussed previously.
The costs of pain and suffering (costs A7 and B3) cannot be
evaluated in dollars, but are likely to be similar in value for
households A and B. Therefore no analyses of these costs are
carried out.
Overall travel costs for former occupants of the restricted
zone are increased (Cost A8). Persons relocated from the
restricted zone are probably forced to travel further to their
places of work, school, and other activities, while on
relocation. Therefore, increased travel costs are included in
the cost of relocation for household A. These costs were
estimated on the basis of the predicted size of the restriction
zone for an SST-2 type accident with average meteorology and
population distribution typical of nuclear power plant
environments.
Persons not relocated, but residing in the region of the
restricted zone are forced to travel longer distances when going
about their daily routine because of the closure of roads and
streets traversing the restricted zone (Cost A9). Any marginal
increase in the area encompassed in the restricted zone
marginally increases travel distances for those residing outside
the restricted zone.
The health risk imposed on the occupants of residence B
during the period that household A is relocated (Cost B4) is not
estimated here, but must be estimated in the process of
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establishing the PAG. It is assumed that both residence A and
residence B are decontaminated before household A is returned to
its residence.
After household A returns to residence A, both households A
and B are subjected to the low levels of risk from the residual
levels of contamination remaining after these residences have
been decontaminated. The residual contamination level at the
two residences is assumed to be the same. Therefore, the true
health risk imposed by residual contamination (costs A9 and B5)
is assumed to be equal for the two residences and are not
evaluated.
The result is that the sum of costs Al, A2 (as adjusted by
costs A3 and A6), A4, A5, A8 and A9 is the net monetary cost
directly related to relocating household A. Cost B4 (a health
risk) is the net detriment incurred by household B. These costs
and health ^risk are to be evaluated for a residence
characteristic of the U.S. population of single family dwellings
located in urbanized areas. Both residences are assumed to be
of average size and value, and to be located on average sized
residential lots. These residences are assumed to house
families of average size for the U.S. population with average
levels of family income. This sum is the first component of the
cost needed for establishing the relocation PAG. It must be
summed to the two other major components of cost discussed below.
4. Cost of Business Closures
The second major component of costs to be used in
establishing the relocation PAG is the social cost of the
closure of neighborhood-based retail and service businesses.
These businesses derive most of their revenue from the
communities they serve. All such neighborhood businesses are
assumed to be closed since the absence of a population would
result in little or no demand for their products or services.
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Note that closure of all types of businesses other than
retail trade and services is not included in relocation costs.
Any closure of manufacturers or farms would be based on
occupational exposure regulations or the inability to sell
contaminated products. These costs would not be a result of
relocation of the public.
The social value of the contribution of neighborhood
businesses to their communities is the "value added" to the
products or services they provide, which is the return to the
factors of production used by these businesses. This is the
wages paid employees, profits to owners, interest payments to
cover the return on capital invested in buildings, equipment and
inventory, and the rent on land. This value added is lost when
these businesses are closed, and the loss continues until these
factors of production are reemployed. Since it is to be
expected that these businesses will reopen when they, and the
neighborhoods they serve, are recovered and restored to use, the
length of their unemployment is the length of the relocation
period. This cost is to be expressed as a cost per household.
Another cost associated with the closure of these
businesses is the loss of any inventories held at the time of
their closure that cannot be sold or used after recovery.
These two business-related costs are calculated based on
the aggregate of these types of businesses nationwide. This
sum, expressed as a cost per household, represents the estimated
social cost of the closure of these businesses.
5. Cost of Idle governmental Facilities and Public Utilities
The third major component of costs needed to establish the
relocation PAG is the loss of the use of public facilities
provided by local government and the plant capacity and
*
distribution system for public utilities. Examples of
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governmentally provided facilities and services likely to be
affected are streets, schools, libraries, parks, playgrounds,
recreational facilities, and sanitation and water services. The
public utilities lost are primarily electrical power, natural
gas and telephone service.
6. Total Cost of Relocation
The net total monetary cost of the relocation of household
A, exclusive of the health risk imposed on household B during
the period of relocation is the sum of three components: the
direct cost of relocating household A; the cost of business
closures, expressed on a per household basis; and the cost of
the loss of public facilities and services, and public
utilities, also expressed on a per household basis. This sum
represents the total monetary cost of the closure of residence A.
Some components of total monetary cost are proportional to
the duration of relocation; others are fixed and independent of
the duration of relocation.
The length of time of relocation must be established in
order to estimate total costs. Since the property near the
boundary of the restricted zone is not severely contaminated, it
is assumed for this assessment that it will be possible to
decontaminate it within one year. A one-year period of
relocation is used.
Table 2 shows that the estimated average net cost of
relocating a household from the boundary of the restricted zone
is about $71 per day. Based on an average of 2.66 residents per
household, the average cost per individual is about $27 per
day. Analyses supporting the values in Table 2 are in the
Appendix.
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As stated at the beginning of this report, the projected
dose limit (the PAG) which would be established by evaluating
the costs and benefits of relocation is determined in the PAG
Manual (EP-89). There the net cost of relocation,
$27/person/day, is compared to the net increase in health risk
experienced by persons not relocated, which is Cost B4 in
Table 1.
Table 2: Cost of Relocating a Household at the Boundary of the
Relocation Zone
Operation or cause
Cost per day
Cost per accident
Al Moving costs (two moves)
A2 Loss of use of residence
A4 Household's extra living costs
A5 Extra maintenance and security
costs for vacant property
A8 Extra travel cost to household
A9 Extra travel cost to others
in region of household
Value of lost business
lost business activity
lost inventory
Idle government facilities
and public utilities
Totals
$1641/accident
£ 7.89/day
£ 3.41/day
$ 1.98/day
fc 9.94/day
$ 1.96/day
£37.39/day
$ 3.44/day
$66.01/day
52.00/accident
$1693/accidenta
alf relocation lasts one year, the daily cost equivalent
to the fixed cost of $1693 is 1693/365 = $4.64/day. The
resulting total daily cost is therefore estimated to be
about $71/day/household.
15
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REFERENCE
EP-89 U.S. ENVIRONMENTAL PROTECTION AGENCY. Manual Of Protective
Action Guides and Protective Actions for Nuclear Incidents.
EPA/520/1-75-001. March 1989.
16
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APPENDIX
A.I Derivation of the Cost of Relocation
This Appendix presents the derivation of the costs of
relocation shown in Table 2 of the main text. It also discusses
the reasoning behind the methodology used for the cases where
the methodology is not straight forward. Cost numbers used in
identifying costs conform to those used in the body of this
report.
A.2 Moving Costs (Cost Al)
Moving cost is the only cost shown in Table 2 of this
report that is sensitive to the total size of the relocation
zone. This is because, as explained below, the distance the
household residing just inside the boundary must move is a
function of the total number of persons moved, as well as other
parameters.
It is assumed that the households inside the boundary of
the relocation zone are moved to areas outside the relocation
zone as the boundary line is moved outwards from the center of
the most highly contaminated area, and it is further assumed
that the vacant houses nearest the relocation zone are always
the ones chosen to house those relocated. Those households
located just inside the final boundary of the relocation zone
will be moved to vacant houses on the outer perimeter of the
area used to house those relocated. Reflection will confirm
that this correctly determines the marginal cost of moving the
households at the boundary of the relocation zone, because, if
the boundary had been established just one residence's width
inside its final location, these households would not have had
to be moved.
A-l
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For the purpose of the evaluation performed here, the size
of the relocation zone used is determined by a 2-rem PAG based
on an SST-2 type accident (SN-82). This PAG level is chosen
because it is the dose justified solely on the basis of health
risk. If it had been determined that cost considerations
justified a lower PAG, a larger relocation zone would have been
analyzed.
The relocation zone is assumed to be elliptical with major
and minor axes equal to 45 km and 15 km respectively (or 28 mi
and 9.3 mi respectively). These dimensions are calculated based
on an SST-2 accident with average meteorological conditions and
a one-year dose commitment equal to 2 rems (SN-82). The area of
this ellipse is:
2
Area of ellipse = 3.14 x 14 x 4.7 = 204 mi .
The population density within this ellipse is assumed to be
2
105 persons/mi . This value is based on the average
population density within 30 miles of 91 reactor sites for all
NRC administrative regions (NU-82, Fig. D.l-13). The number of
persons relocated is:
Total persons relocated = 105 x 204 = 21,420.
The population density outside the relocation zone, but
within 100 miles of the reactor sites is assumed to be 95
2
persons/mi (NU-82, Fig. D.l-15). The persons relocated are
assumed to move to the nearest available housing in the area
surrounding the relocation zone. They are assumed to occupy
only that housing in the surrounding region that is for rent or
for sale. Based on the 1980 Census of Housing, this vacancy
rate is 3.8 percent (BC-80). Therefore, the potential density
outside the relocation zone, assuming all housing for rent or
for sale is occupied by relocated households is:
(Potential density)(1-0.038) = 95.
2
Therefore, potential density = 98.75 persons/mi .
A-2
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Thus the area outside the relocation zone is able to absorb
2
98.75 - 95 = 3.75 persons/mi . The area needed to absorb
21,420 persons is:
Area =21,420/3.75 = 5708 mi2.
Assume that the perimeter of the area needed to house those
relocated is an ellipse with major and minor axes equal to
(r + 14) mi and (r + 4.7) mi respectively where r is the
distance from the boundary of the relocation zone to the
perimeter of the relocation area needed to house those
relocated. The value of r is determined from the following
equation:
3.14U + 14)(r + 4.7) = 5708 + 204 = 5912,
r = 34.3 mi.
The average length of move is, therefore, assumed to be 34.3
miles.
It is assumed that most households would not move their
heavy appliances and bulky furniture. The least expensive means
of moving household goods a relatively short distance is by use
of a rental truck, where temporary workers are hired to do the
packing, loading and unloading. Employing a moving firm to
complete the entire job is substantially (about 3 to 5 times)
more expensive. To move the belongings of an average 1500-1700
sq. ft. home with three bedrooms requires a 22-24-foot truck.
According to Ryder Truck Rental, the one-way mileage cost for a
22-ft truck ranges from $0.30 - $0.50. The cost of gasoline is
estimated based on a cost of $1 per gallon, using an 8-mile per
gallon estimate, provided by Ryder, for fuel efficiency. This
translates into $0.125 per mile. Combining this with $0.40 as
an average mileage cost for truck rental gives approximately
$0.55 for the value of the total cost per mile. The fixed cost
for the truck is $50.00 per day. It is estimated that each move
would take a maximum of two days. The estimated fixed cost of
the boxes for packing household belongings for the situation
described above is $250.00 (CO-88).
A-3
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Total labor requirements for the move are based on
estimates provided by local movers. To move the contents of the
house described above would require a supervisor and driver, and
two additional people to pack, load, and unload the personal
belongings of the household. While it is assumed that, in most
cases, the head of the household would drive the truck and
supervise the move, the opportunity cost of this labor should be
included in the calculation. A wage rate of $15 per hour, which
approximates the wage of a union truck driver is used. Most
moving companies employ unemployed local workers to assist in
moving and pay them about $5 to $10 per hour, depending on local
wages for common labor. A rate of $8 per hour is used in this
calculation. The estima:ed total time for each move, obtained
from a local moving company, is 14 hours, not including driving
time. Driving time is assumed to be two hours. The fixed cost
of one move is (CO-88):
Truck Rental $100
Boxes^ 250
Supervisor and Driver (16 hrs at $15/hr) 240
Two laborers (2x14 hrs at $8/hr) 224
$814
Therefore, the cost of the move to temporary housing is:
(814 + 34(0.55)) = $833
The cost of the return, one year later, is discounted one
year at 3% to account for the one-year delay in expenditure
where the discount factor is 0.9709:
0.9709 (814) = $808.
Therefore, the cost of the two moves is $1641.
A.3 Loss of the Use of Residence (Cost A2)
The loss of the use of residence A for the one-year time
period of relocation is calculated for the average value of
detached houses for the U.S. The average value for detached
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houses for the U.S. for 1980 was $47,200 in 1980 dollars (BC-88,
Table 1222). The adjustment to 1988 dollars, based on the
consumer price index (CPI) for shelter (CE-89, Table B-58) is:
=
81.0 -1--3*-
Thus the 1988 price for the average detached house is:
$47,200 (1.59) = $75,229.
Consumer surplus represents whatever extra value a
household may put on their place of residence over and above its
market price. This value derives from such things as access to
the places of work anclj school, established friendships with
neighbors, familiarity\ with the neighborhood and other
non-tangible benefits received from the residence and its
location. This consumer surplus is probably largely lost to
household A as a result of the accident. It is also
substantially lost to household B during the period of
relocation due to the severe disruption of the neighborhood, the
relocation of neighbors, and the closure of local shopping, as
well as to the general fear of radiation contamination. It is
assumed here that the consumer surplus is entirely lost to
household B during the period of relocation. Since residences A
and B are side be side, household A could derive no consumer
surplus from residence A during the period of relocation, so
loss of consumer surplus does not contribute to the loss of use
of residence A during relocation.
Assume a 20% loss in value of the residence due to the
perception of risk from residual contamination. As mentioned in
the body of this report, the choice of 20% is arbitrary because
this value can be determined only in the event of an actual
accident at a nuclear power reactor that causes sufficient-
contamination that households are relocated. It is further
assumed that the cost of decontaminating residence A is 5% of
its value. Thus, it is assumed that the value of the residence
before being decontaminated is 75% of its value before the
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accident. The value of the residence before decontamination is,
therefore:
0.75 ($75,229) = $56,421.
Assume the useful future life of the residence is 30 years
and that the long run annual rate of interest (independent of
inflation) is 3%. The amortization factor is 0.051019.
Therefore the annual cost is:
0.051019 ($56,421) = $2,879,
and the daily cost is:
$2.879/365 = $7.89/day.
A.4 Households Extra Living Costs (Cost A4)
The forced relocation of household A imposes a loss in the
overall quality of life. This loss stems from such things as
differences in the size and layout of the replacement residence,
an inconvenient or undesirable set of amenities provided by the
residence, and lack of knowledge of the local community and
shopping locations. All of these are aside from the qualities
included in consumer surplus, as discussed above. We assume
this loss could be compensated for by increased income. It is
assumed that it would require a 5% increase in after tax income
to restore this quality of life. Annual after tax income for
1985 was $22,646 per household (BC-88, Table 695). The
adjustment to 1988 dollars based on the CPI for all items is
118.3/107.6 = 1.10 (CE-89, Table B-58). Thus, after tax income
for 1988 was 1.1 (22,646) = 24,898. Therefore, extra living
costs are;
0.05 (24,898)/365 = $3.41/day.
A.5 Extra Maintenance and Security Costs for Vacant Property
(Cost A5)
It is assumed that the maintenance requirements for
residence A during the time it is vacated is double the
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requirements when it is occupied. Therefore, the extra costs of
maintenance can be calculated based on the normal cost of
maintenance. Total costs of residential maintenance in 1983
were $18,128 x 106 (BC-88, Table 1229). The total number of
housing units in 1983 were 93,519 x 103 (BC-88, Table 1221).
Assuming the maintenance cost for 1-unit structures is the same
as for other types of housing, the average maintenance cost for
1-unit structures in 1983 was:
*18'128 * 10* = $193/structure.
93,519 x l(r
The adjustment factor for 1988 dollars ^ased on the CPI for
home maintenance and
repairs (CE-89, Table B-59) is:
114.7/99.9 = 1.148,
and the cost in 1988 dollars is:
1.148($193) = $223/year or $0.61/day.
Local insurers in Richland, Washington; Chicago, Illinois;
and Portland, Oregon, were contacted to obtain estimates of the
premium required to insure a 1500-sq. ft., vacant,
single-family detached home against ordinary risks under
ordinary conditions (CO-88). The estimates varied widely from
carrier to carrier at each location as well as from location to
location.* The premium cost of insuring a vacated house in
Richland is approximately $30 to $250 per year, depending on the
carrier. In Chicago, that cost ranges from $500 to $1500 per
year with the qualification that some residences would be
considered uninsurable. In Portland, the premium is about $300
to $700 per year. We used a cost of $500 per year as an
estimate that falls within the range of these costs. Therefore,
security costs are estimated to be $1.37/day.
Extra maintenance and security costs sum to $1.98/day.
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A.6 Extra Travel Costs to Household (Cost A8)
It is assumed that major arterial highways will be reopened
for use soon after the accident and that their use will be
unaffected by the choice of the boundary of the restricted zone.
Travel to work, school, church, and to visit friends and
relatives is assumed to be the only travel that is increased as
a result of relocation. The yearly trips and the number of
miles traveled in 1983 (BC-88, Table 1005) were:
6 fi
Trips (x 10 ) Miles (x 10 ) Av. Miles
To Work 35,375 302,185 8.5
To School and Church 7,444 40,990 5.5
To Visit Friends and
Relatives 12,543 135,801 10.8
Totals 55,362 478,976 8.65
The number of households in the U.S. in 1983 was 83,918 x
BC-88^ Tab.
household were:
10 (BC-88, Table 56). The average trips per day per
55,362 x 10 = -^g-L trips/nousehold/day.
83,918 x 10 x 365
Assume that one-half of these trips are replaced by equal
length trips from the new location (note that the household was
on the edge of the restricted zone, so it may be reasonable to
expe'ct that about one-half of these activities will be relocated
outside the restricted zone or shut down, in which case a
substitute activity may be found). Therefore, assume that
1.81/2 =0.9 trips per day per household are still undertaken,
to the old locations, and that the round-trip mileage to these
locations is increased by 40 miles (note that the household is
assumed to have moved 34 miles, so the 40-mile round trip seems
reasonable). Travel costs by automobile were $0.272 per mile in
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1985 (BC-88, Table 1010). This cost can be adjusted to 1988
dollars by the CPI for private transportation (CE-89, Table B-59):
lH'l (0.272) = $.276.
Therefore additional travel cost to the relocated household
is estimated to be:
0.9 ($.276)(40) = $9.94.
A.7 Extra Travel by Others in the Region of the Household
(Cost A9)
The presence of the restricted zone forces changes in the
patterns of automobile travel in the region surrounding the
restricted zone. Households not relocated can be expected to
experience increased travel because streets and roads in the
restricted zone are closed. The problem is to estimate the
increased travel resulting from the addition of a single
residence to the restricted zone.
This estimate is based on an urban area where streets are
laid out on a rectangular grid. Assume there are 12 block
lengths per mile in one direction and 14 block lengths per mile
in the other, so that the average block length is about 13 per
mile. Assume there are 10 residences on each full block.
As the boundary of the restricted zone is moved outwards,
the addition of the first residence on the first block across the
street from the restricted zone forces the closure of the street
between that residence and the restricted zone. Assume that all
traffic .using that street is diverted two block lengths (a one-
block length deviation outwards from the restricted zone and a
one-block return). The average total deviation is 2/13 miles.
The addition of the other residences on that same block to the
restricted zone causes no further increase in travel distances.
If a residence on another block on the same street is added to
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the restricted zone, no additional travel is imposed. However,
if a residence on a block further out from the restricted zone is
added, another 2/13 miles of extra travel is imposed. For the
purpose of this estimation, it is assumed that the average
additional travel imposed by the addition of a block of houses to
the restricted zone is 1/13 miles. Since it is assumed that
there are 10 residences on each block, the average increase in
travel distance for each residence added to the restricted zone
is (1/10)(1/13) = 0.0077 miles.
The average vehicle miles traveled on local, urban streets
for 1985 was 924 miles per day per mile of street (BC-88, Table
1000). There are two primary considerations in evaluating
whether this is an appropriate estimate for this case. First,
all residents in the neighborhood that resided in the restricted
zone are relocated, so their contribution to this local travel is
removed. Since the street under discussion is immediately
adjacent to the restricted zone, relocation can be expected to
remove^upwards of one-half of the traffic on the local street.
Secondly, those people still residing in the area, and traveling
to points across the relocation zone are forced to divert their
route of travel around the restricted zone increasing the travel
on local streets immediately adjacent to the restricted zone. It
is assumed here that these two influences, which counteract each
other, will leave this estimate unchanged. Therefore, the extra
travel caused by adding a residence to the restricted zone is
estimated to be (0.0077)(924) =7.1 miles per day. The cost to
operate an automobile is $0.276 per mile in 1988 dollars, as used
above. Therefore, the extra travel cost to others in the region
from adding one residence to the restricted zone is estimated to
be 7.1(0.276) = $1.96 per day.
A.8 Cost of Lost Business Activity
The relocation of the large number of households from the
restricted zone will force the closure of all retail and service
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businesses located in the restricted zone. For the purpose of
this estimate it is assumed that these businesses are distributed
within the restricted zone in the same proportion as in the
entire country. Therefore, the cost of this loss in business can
be calculated on a per household basis. It is assumed that the
goods and services provided by these businesses will be replaced
by similar goods and services provided by other business
establishments in the vicinity of the relocated households.
Since the relocated households will be thinly dispersed over the
entire area absorbing the relocated households it is assumed that
the closed businesses are unable to relocate. This is because
they have no assurance they will be able to retain any
I
significant proportion of their former business in competition
with the businesses
already established in the region surrounding
the relocation zone. Therefore, it is assumed that all inputs to
businesses (i.e., all labor and the capital investment) are
unemployed for the duration of the relocation.
As stated in the body of this report, the appropriate
measure of the loss of these business activities is the value
they add to the gross national product. The gross product
contributed by retail trade and by services in 1986 were
9 9
$407.7x10 and $700.2x10 respectively. The value of retail
trade can be adjusted to 1988 dollars by use of the CPI for all
commodities (CE-89, Table B-60):
111-5- Q t Q
3704—4 (407.9xl09) = $436.5xl09.
Similarly , the value of services can be adjusted to 1988
dollars by use of the CPI for all services (CE-89, Table B-60):
125.7 . 00. Q
115.4 ($700.2 x 109) = $762.7 x 109
The value of retail trade and services is then summed to
9
give $1198 x 10 in 1988 dollars. This value can be adjusted
for population growth, where it is assumed that the per capita
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consumption of retail goods and services remained constant from
1986 to 1988 (CE-89,Table B-31):
243,915xl03 ^ 0 n
3 ($1198xl09) = $1221xl09
241,613xlOJ
There are 89,479,000 households in the U.S., therefore, the
business loss per household per day is (BC-88, Table 56):
q
1221x10
89,479,000x365 = $37.39/household/day
A.9 Cost of Lost Business Inventory
Food inventories at any one time are estimated to be $18.6
billion (BC-88, Table 1307). As cited above, the number of
households in 1987 was 89,479,000. Therefore, the inventory per
household is:
= *208/household
Assume that 25% of food inventories are lost as a result of
the accident. Therefore, the loss in inventories is:
0.25(^208) = $52.00/household.
A. 10 Loss of Use of Local Government Facilities and Public
Utilities
The relocation of the large number of households from the
restricted zone will idle or reduce the use of government
facilities and services, and public utilities. Examples of the
publicly provided facilities and services likely to be affected
are streets, traffic control systems, schools, libraries, parks,
playgrounds, recTeational facilities, and sanitation and water
service. Electrical power, natural gas and telephone service are
the primary public utilities affected.
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Although the facilities and services lost to the households
that relocate will be replaced by similar facilities and services
at their place of relocation, .the plants and equipment serving
their old residences are idle during the period of relocation.
The fact that the facilities and services at the pre'-relocation
residences are replaced by similar facilities and services at the
replacement residences does not necessarily imply that idle
capacity at one location is simply being traded for idle capacity
at another location. It is normal that there be vacant housing/
both for rent and for sale, in any area. This means that there
is slack in the system which, in a sense, is planned for in the
provision of these facilities and services. The national average
vacancy rate (housingnfor rent and for sale) was 3.8 percent in
1980 as used in deriving the cost of moving. In the large scale
relocation investigated here it is to be expected that the
provision of the facilities and services at the new location
overstresses the system because the normal vacancy rate is
reduced. This is the justification for considering the idling or
under utilization of these facilities and services in the
relocation zone to be a cost of relocation.
These estimates are based on the capital invested in state
and local government, and in domestic telephones, electric
utilities and privately owned gas utilities.
Gross stock in equipment and structures owned by state and
local government was estimated to be $2643x10 in 1986 (BC-88,
Table 722). This is adjusted to 1988 dollars by use of the gross
national product (GNP) deflator for state and local government
purchases of goods and services (CE-89, Table B-3):
130.2 Q L o
115.3 ($2643 x 109) = $2985 x 109.
Since there are 89,479,000 households in the U.S. gross
stock per household is:
2985x10 = $33,350/household.
89,479,000
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A problem is to estimate how much of this total is affected by
relocation. Many services provided by state and local governments
are unlikely to be affected by relocation. Examples are:
administration of state and local governments, administration of
the court system, operation and maintenance of major highways,
operation of the national guard, colleges and universities, and
state police. It is assumed here that the use of one-half of the
total capital investment by state and local governments is lost to
each household that relocates. Therefore, the gross stock and
equipment owned by state and local government that is idled during
relocation is estimated to be $16,675 per household.
The gross book cost of plants owned by domestic telephones was
$195xl09 in 1985 (BC-88, Table 881). Investment in electric
Q
utility plants was $397X10 , and investment in gas utility plants
was $88xl09 in 1985 (BC-88, Tables 936 and 941). Since all of
these costs are expressed in 1985 dollars, they can be summed and
then converted to 1988 dollars. The estimated gross investment in
stock and equipment in telephones, electric and gas service was
$680xl09 in 1985. This is converted to 1988 dollars by the GNP
deflator for gross domestic investment (CE-89, Table B-3):
105.2 . Q . Q
rooTe ($680xio9) = $7iixio9.
This can than be expressed as a gross stock per household:
g
X 10 = $7,945/household.
89,564,000
This can now be summed to the gross stock and equipment
owned by State and local government calculated above:
16,675 + 7,945 = $24, 620/household .
Assume the useful future life of this capital equipment is
30 years and that the long run annual rate of interest,
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independent of inflation, is 3 percent. The amortization factor
is 0.051019. The annual cost is:
.051019($24,620) = $1256/household.
Therefore, the loss of these services, on a per day basis is:
$1256/365 = $3.44/household/day.
BC-80 BUREAU OF THE
REFERENCES
CENSUS. 1980. Census of Housing, Vol. 1,
Chapter 1, Pact 1, United States Summary.
BC-88 BUREAU OF THE CENSUS. Statistical Abstract of the U.S.,
December 1988.
CE 89 COUNCIL OF ECONOMIC ADVISORS. Economic Report of the
President, January 1989.
CO-88 Private Telephone Conversations Undertaken by EPA
Contractor, June 1988.
NU-82 U.S. NUCLEAR REGULATORY COMMISSION. Technical Guidance
for Siting Criteria Development, NUREG/CR-2239, December
1982.
SN-82 SANDIA NATIONAL LABORATORIES. Technical Guidance for
Siting Criteria Development. NUREG-CR 2239. U.S. Nuclear
Regulatory Commission, Washington, DC 20555, December
1982.
*U.S. Government Printing Office : 1989 - 617-003/04905
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