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Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise

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  • Francesco Bosello
  • Roberto Roson
  • Richard Tol

Abstract

The economy-wide implications of sea level rise in 2050 are estimated using a static computable general equilibrium model. This allows for a better estimate of the welfare effects of sea level rise than the common direct cost estimates; and for an estimate of the impact of sea level rise on greenhouse gas emissions. Overall, general equilibrium effects increase the welfare costs of sea level rise, but not necessarily in every sector or region. In the absence of coastal protection, economies that rely most on agriculture are hit hardest. Although energy is substituted for land, overall energy consumption falls with the shrinking economy, hurting energy exporters. With full coastal protection, GDP increases, particularly in regions with substantial dike building, but utility falls, least in regions that protect their coasts and export energy. Energy prices rise and energy consumption falls. The costs of full protection exceed the costs of losing land. The results also show direct costs – the usual method for estimating welfare changes due to sea level rise – are a bad approximation of the general equilibrium welfare effects; previous estimates of the economic impact of sea level rise are therefore biased. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Francesco Bosello & Roberto Roson & Richard Tol, 2007. "Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(3), pages 549-571, July.
  • Handle: RePEc:kap:enreec:v:37:y:2007:i:3:p:549-571
    DOI: 10.1007/s10640-006-9048-5
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    More about this item

    Keywords

    computable general equilibrium; impacts of climate change; sea level rise; C68; D58; Q25;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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