Hanford remediation economics: Cost escalation assumptions

The US Department of Energy-Office of Environmental Management's (DOE-EM's) cost estimate of Hanford's Waste Treatment Plant (WTP) has grown from $700 million in 1987 dollars (or $1.9B in 2024 dollars) to a remaining estimated cost of $10.1 to $20.3 billion in 2025, when the Hanford site's total remaining estimated cleanup costs ranged from $364 billion to $589 billion. The scope has evolved, following the "Tri-Party Agreement" between the US Department of Energy, the US Environmental Protection Agency, and the Washington State Department of Ecology, which was first signed in 1989. It is difficult to identify the sources of cost increases due to the almost continuous changes in scope. This paper examines the hypothesis that the cost escalation in Hanford cost estimates is approximately 2-4 % nominal, which is the rate Hanford remediation cost estimators use. This paper recommends that Hanford cost estimators use a real escalation rate of at least 4 % with Office of Management and Budget real discount rates. If the real escalation rate exceeds the real interest rate on 30-year government bonds, the discount rate could be negative, implying higher present values of program costs than previously estimated.