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Environmental and Resource Economics

, Volume 37, Issue 3, pp 549–571 | Cite as

Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise

  • Francesco Bosello
  • Roberto RosonEmail author
  • Richard S. J. Tol
Article

Abstract

The economy-wide implications of sea level rise in 2050 are estimated using a static computable general equilibrium model. This allows for a better estimate of the welfare effects of sea level rise than the common direct cost estimates; and for an estimate of the impact of sea level rise on greenhouse gas emissions. Overall, general equilibrium effects increase the welfare costs of sea level rise, but not necessarily in every sector or region. In the absence of coastal protection, economies that rely most on agriculture are hit hardest. Although energy is substituted for land, overall energy consumption falls with the shrinking economy, hurting energy exporters. With full coastal protection, GDP increases, particularly in regions with substantial dike building, but utility falls, least in regions that protect their coasts and export energy. Energy prices rise and energy consumption falls. The costs of full protection exceed the costs of losing land. The results also show direct costs – the usual method for estimating welfare changes due to sea level rise – are a bad approximation of the general equilibrium welfare effects; previous estimates of the economic impact of sea level rise are therefore biased.

Keywords

computable general equilibrium impacts of climate change sea level rise 

JEL classification

C68 D58 Q25 

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Notes

Acknowledgements

We had useful discussions about the topics of this paper with Andrea Bigano, Carlo Carraro, Sam Fankhauser, Marzio Galeotti, Andrea Galvan, Claudia Kemfert, Hans Kremers, Katrin Rehdanz and Kerstin Ronneberger. Useful comments on an earlier draft of this paper were provided by J.A. Smulders and two anonymous referees, but remaining errors are only ours. Marco Lazzarin gave essential support during early stages of the research, in particular on model calibration, adaptation and simulation runs. The Volkswagen Foundation through the ECOBICE project, the EU DG Research Environment and Climate Programme through the DINAS-Coast (EVK2-2000-22024) and ENSEMBLES projects, the US National Science Foundation through the Center for Integrated Study of the Human Dimensions of Global Change (SBR-9521914), the Michael Otto Foundation for Environmental Protection, and the Ecological and Environmental Economics programme at ICTP-Trieste provided welcome financial support.

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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  • Francesco Bosello
    • 1
    • 2
  • Roberto Roson
    • 1
    • 2
    • 3
    Email author
  • Richard S. J. Tol
    • 4
    • 5
    • 6
    • 7
  1. 1.Fondazione Eni Enrico MatteiVeniceItaly
  2. 2.The Abdus Salam International Centre for Theoretical PhysicsTriesteItaly
  3. 3.Dipartimento di Scienze EconomicheUniversità ca’Foscari di VeneziaVeneziaItaly
  4. 4.Economic and Social Research InstituteDublinIreland
  5. 5.Research Unit Sustainability and Global ChangeHamburg University and Centre for Marine and Atmospheric ResearchHamburgGermany
  6. 6.Institute for Environmental StudiesVrije UniversiteitAmsterdamThe Netherlands
  7. 7.Center for Integrated Study of the Human Dimensions of Global ChangeCarnegie Mellon UniversityPittsburghUSA

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