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Estimates of the Economic Effects of Sea Level Rise

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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.

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Authors and Affiliations

  1. Economic Research Service, U.S. Department of Agriculture, Washington, DC, USA

    Roy F. Darwin

  2. Centre for Marine and Climate Research, Hamburg University, Hamburg, Germany;

    Richard S. J. Tol

  3. Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands

    Richard S. J. Tol

  4. Center for Integrated Studies of the Human Dimensions of Global Change, Carnegie Mellon University, Pittsburgh, PA, USA

    Richard S. J. Tol

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Darwin, R.F., Tol, R.S.J. Estimates of the Economic Effects of Sea Level Rise. Environmental and Resource Economics 19, 113–129 (2001). https://doi.org/10.1023/A:1011136417375

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