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The economic value of delaying adaptation to sea-level rise: An application to coastal properties in Connecticut

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  • Tsvetan Tsvetanov

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  • Farhed Shah

Abstract

The magnitude and frequency of coastal storms are expected to increase with rising global sea levels, which necessitates evaluating coastal flood adaptation measures. This study examines an important issue in the context of coastal flood protection, namely, the decision when to adopt protection measures. For any given coastal region, our benefit-cost framework allows us to determine the optimal timing of initiating protection that maximizes expected net benefits. We present an application of this framework to a coastal area in Connecticut. Our results suggest that the optimal timing of adopting protection may vary across different census blocks within the study area. We find that using a relatively low discount rate in the benefit-cost analysis implies greater heterogeneity in the timing decisions and earlier overall adoption, whereas, with higher discount rates, the timing decisions are reduced to a choice between early protection and no protection at all. If possible negative environmental and aesthetic impacts of sea barriers are taken into account, delaying protection would become more desirable, with the extent of delay being sensitive to the relative magnitude of one-time costs (e.g., loss of ocean view and recreational opportunities) vs. continuous costs (e.g., shoreline erosion and loss of wetlands). Copyright Springer Science+Business Media Dordrecht 2013

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File URL: http://hdl.handle.net/10.1007/s10584-013-0848-7
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Bibliographic Info

Article provided by Springer in its journal Climatic Change.

Volume (Year): 121 (2013)
Issue (Month): 2 (November)
Pages: 177-193

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Handle: RePEc:spr:climat:v:121:y:2013:i:2:p:177-193

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Web page: http://www.springer.com/economics/journal/10584

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  1. Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May.
  2. Francesco Bosello & Robert Nicholls & Julie Richards & Roberto Roson & Richard Tol, 2012. "Economic impacts of climate change in Europe: sea-level rise," Climatic Change, Springer, vol. 112(1), pages 63-81, May.
  3. Koch, James V., 2010. "Costs of Defending Against Rising Sea Levels and Flooding in Mid-Atlantic Metropolitan Coastal Areas: The Basic Issues," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1).
  4. Mir Mousavi & Jennifer Irish & Ashley Frey & Francisco Olivera & Billy Edge, 2011. "Global warming and hurricanes: the potential impact of hurricane intensification and sea level rise on coastal flooding," Climatic Change, Springer, vol. 104(3), pages 575-597, February.
  5. Michael, Jeffrey A., 2007. "Episodic flooding and the cost of sea-level rise," Ecological Economics, Elsevier, vol. 63(1), pages 149-159, June.
  6. Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82.
  7. Craig E. Landry & Mohammad R. Jahanā€Parvar, 2011. "Flood Insurance Coverage in the Coastal Zone," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(2), pages 361-388, 06.
  8. Graham, Daniel A, 1981. "Cost-Benefit Analysis under Uncertainty," American Economic Review, American Economic Association, vol. 71(4), pages 715-25, September.
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