Fear of accidents in nuclear power plants, shocks to the housing market and effective policies to mitigate these: evidence from Sweden

This paper investigates the Swedish housing market's reaction to the news of the nuclear accident in Fukushima, Japan, in March 2011. It does so by focusing on two variables that describe the sentiment in the market: the final selling price and the time on the market. Overall, the results reveal substantial negative shocks, with selling prices dropping by 3–4 % and time on the market increasing by 4–5 %. The estimation strategy is then assessed against alternative specifications to test its robustness. This sensitivity analysis reveals that the news of the accident had no impact on the assets in the proximity of the nuclear plant that the country had dismissed several years before the accident. The presence on the territory of evacuation points people may turn to in case of a disaster offers the possibility to confirm the hypothesis that the estimated effects are driven by a demand for more safety, rather than by a fear of damage to the assets. When focusing on the assets in the proximity of nuclear plants, the possibility to quickly reach these evacuation points reveals a significant price premium in the months following the news of the accident in Japan. The results from this study can inform policymakers' decisions on how to increase the support for a technology that has often raised safety concerns among the population. The premium people are willing to pay to live next to these evacuation points can be interpreted as a preference for these sort of policy solutions.