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Estimating Option Values and Spillover Damages for Coastal Protection: Evidence from Oregon’s Planning Goal 18

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  • Steven J. Dundas
  • David J. Lewis

Abstract

Estimating nonmarket benefits for erosion protection can help inform better decision making and policies for communities to adapt to climate change. We estimate private values for a coastal protection option in an empirical setting subject to irreversible loss from coastal erosion and a land-use policy that provides identifying variation in the parcel-level option to invest in protection. Using postmatching regressions and accounting for potential spillovers, we find evidence that the value of the erosion protection option is between 13% and 22% of land price for parcels vulnerable to coastal hazards, implying that owners of oceanfront parcels have a subjective annual probability that they will experience an irreversible loss absent the option to protect between 0.7% and 1.3%. We also find that, because of altered shoreline wave dynamics, a parcel with a private protection option generates a spillover effect on protection-ineligible neighbors, lowering the value of neighboring land by 8%.

Suggested Citation

  • Steven J. Dundas & David J. Lewis, 2020. "Estimating Option Values and Spillover Damages for Coastal Protection: Evidence from Oregon’s Planning Goal 18," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 519-554.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/708092
    DOI: 10.1086/708092
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    Cited by:

    1. Flavia Ioana Patrascu & Ali Mostafavi, 2024. "Spatial model for predictive recovery monitoring based on hazard, built environment, and population features and their spillover effects," Environment and Planning B, , vol. 51(1), pages 39-56, January.
    2. Beasley, W. Jason & Dundas, Steven J., 2021. "Hold the line: Modeling private coastal adaptation through shoreline armoring decisions," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    3. Beasley, William J. & Dundas, Steven J., 2018. "Hold the Line: The Determinants of shoreline armoring as an adaptive response," 2018 Annual Meeting, August 5-7, Washington, D.C. 274442, Agricultural and Applied Economics Association.
    4. Parton, Lee C. & Dundas, Steven J., 2020. "Fall in the sea, eventually? A green paradox in climate adaptation for coastal housing markets," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    5. Wang, Haoluan, 2021. "Flood Your Neighbors: Spillover Effects of Levee Building," 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) 311091, Agricultural Economics Society - AES.

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