Long-term impacts of coastal floods in Europe: a probabilistic analysis

In this report, we quantify the long-term economic impacts of coastal flooding in Europe, in particular, how the direct coastal damages generate long-term economic losses that propagate and compound throughout the century. We integrate a set of probabilistic projections of inundation-related monetary impacts (to residential buildings, firms’ physical assets and agriculture production) into a stochastic dynamic economic model. The uncertainty related to the economic agents’ behaviour and other relevant macroeconomic assumptions, i.e. how would consumers finance the repairing of their homes, how long does it take for a firm to reconstruct, do firms decide to build-back-better after the inundation and possibly compensate the losses with a productivity gain, is explicitly considered. The results show that the long-term total impacts of coastal floods are larger than the direct damages generated by the inundations: by the end of the century EU27 plus UK could lose every year between 0.25% - 0.91% of GDP, under a high emission scenario (RCP8.5). The results present a strong regional variation and in some countries the losses for the economy could reach worrying proportions.