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Evaluating the Economic Cost of Coastal Flooding

Author

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  • Desmet, Klaus
  • Kopp, Robert
  • Kulp, Scott A.
  • Nagy, Dávid Krisztián
  • Oppenheimer, Michael
  • Rossi-Hansberg, Esteban
  • Strauss, Benjamin H.

Abstract

Sea-level rise and ensuing permanent coastal inundation will cause spatial shifts in population and economic activity over the next 200 years. Using a highly spatially disaggregated, dynamic model of the world economy that accounts for the dynamics of migration, trade, and innovation, this paper estimates the consequences of probabilistic projections of local sea-level changes under different emissions scenarios. Under an intermediate greenhouse gas concentration trajectory, permanent flooding is projected to reduce global real GDP by an average of 0.19% in present value terms, with welfare declining by 0.24% as people move to places with less attractive amenities. By the year 2200 a projected 1.46% of world population will be displaced. Losses in many coastal localities are more than an order of magnitude larger, with some low-lying urban areas particularly hard hit. When ignoring the dynamic economic adaptation of investment and migration to flooding, the loss in real GDP in 2200 increases from 0.11% to 4.5%. This shows the importance of including dynamic adaptation in future loss models.

Suggested Citation

  • Desmet, Klaus & Kopp, Robert & Kulp, Scott A. & Nagy, Dávid Krisztián & Oppenheimer, Michael & Rossi-Hansberg, Esteban & Strauss, Benjamin H., 2018. "Evaluating the Economic Cost of Coastal Flooding," CEPR Discussion Papers 13128, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13128
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    More about this item

    Keywords

    Space; Geography; Sea-level rise; Coastal flooding; Spatial growth models; Mobility; Trade;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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