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Environmental and Resource Economics

, Volume 19, Issue 2, pp 113–129 | Cite as

Estimates of the Economic Effects of Sea Level Rise

  • Roy F. Darwin
  • Richard S. J. Tol
Article

Abstract

Regional estimates of direct cost (DC) are commonly used to measure the economic damages of sea level rise. Such estimates suffer from three limitations:(i) values of threatened endowments are not well known, (ii) loss of endowments does not affect consumer prices, and (iii) international trade is disregarded. Results in this paper indicate that these limitations can significantly affect economic assessments of sea level rise. Current uncertainty regarding endowment values (as reflected in two alternative data sets), for example, leads to a 17 percent difference in coastal protection, a 36 percent difference in the amount of land protected, and a 36 percent difference in DC globally. Also, global losses in equivalent variation (EV), a welfare measure that accounts for price changes, are 13 percent higher than DC estimates. Regional EV losses may be up to 10 percent lower than regional DC, however, because international trade tends to redistribute losses from regions with relatively high damages to regions with relatively low damages.

direct cost economic impacts equivalent variation sea level rise 

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Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Roy F. Darwin
    • 1
  • Richard S. J. Tol
    • 2
    • 3
    • 4
  1. 1.Economic Research ServiceU.S. Department of AgricultureWashingtonUSA
  2. 2.Centre for Marine and Climate ResearchHamburg UniversityHamburgGermany;
  3. 3.Institute for Environmental StudiesVrije UniversiteitAmsterdamThe Netherlands
  4. 4.Center for Integrated Studies of the Human Dimensions of Global ChangeCarnegie Mellon UniversityPittsburghUSA

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