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Estimates of the Economic Effects of Sea Level Rise


  • Roy Darwin
  • Richard Tol


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. Copyright Kluwer Academic Publishers 2001

Suggested Citation

  • Roy Darwin & Richard Tol, 2001. "Estimates of the Economic Effects of Sea Level Rise," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 113-129, June.
  • Handle: RePEc:kap:enreec:v:19:y:2001:i:2:p:113-129
    DOI: 10.1023/A:1011136417375

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    References listed on IDEAS

    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
    2. Darwin, Roy & Tsigas, Marinos E. & Lewandrowski, Jan & Raneses, Anton, 1995. "World Agriculture and Climate Change: Economic Adaptations," Agricultural Economics Reports 33933, United States Department of Agriculture, Economic Research Service.
    3. Darwin, Roy & Tsigas, Marinos & Lewandrowski, Jan & Raneses, Anton, 1996. "Land use and cover in ecological economics," Ecological Economics, Elsevier, vol. 17(3), pages 157-181, June.
    4. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39.
    5. Tol, Richard S. J., 1996. "The damage costs of climate change towards a dynamic representation," Ecological Economics, Elsevier, vol. 19(1), pages 67-90, October.
    6. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Springer;Society for Computational Economics, vol. 9(2), pages 83-127, May.
    7. Yohe Gary & Neumann James & Ameden Holly, 1995. "Assessing the Economic Cost of Greenhouse-Induced Sea Level Rise: Methods and Application in Support of a National Survey," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 78-97, November.
    8. Richard Tol, 1999. "Spatial and Temporal Efficiency in Climate Policy: Applications of FUND," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 33-49, July.
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