PNNL

Abstract

Access to weapons-useable fissile material—highly enriched uranium and separated plutonium—is the primary technical barrier to nuclear weapons development. Nuclear non-proliferation policy is largely concerned with the secure distribution and use of these materials and the technologies that produce them. To the extent that both materials and technologies are traded in markets, the problem may be viewed as one of regulating markets to give an acceptable set of allocative outcomes. While a laissez-faire approach to these markets was rejected long ago, most current policy is based on prescribed or proscribed behavior rather than market incentives. “Market-based” non-proliferation policies would act through incentives in the nuclear materials and technology markets rather than by prescribing outcomes or behavior. Possible polices of this sort include subsidized enrichment services, credits to impute value to spent nuclear fuel, and new markets for special scarce nuclear materials. While market-based policies will not replace command-and-control policies entirely, they could lead to efficient regulation which suffices for most market participants, reserving special, more discriminatory instruments for the few hard cases.