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Financing Adaptation to Climate-Induced Retreat from Coastal Inundation and Erosion


  • Leo Dobes

    () (Crawford School of Public Policy, The Australian National University)

  • Bruce Chapman

    () (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia)


Climate projections suggest increased inundation and erosion of beachfront property on the east coast of Australia over the coming century. Protective measures and accommodation to the effects of flooding offer initial lines of defence, but managed retreat will ultimately be required for some property owners. Current and disaster management frameworks offer little policy guidance on who should pay for retreat, or how. Ordinary insurance, catastrophe insurance, group risk insurance, catastrophe bonds and reverse mortgages offer potential solutions, but are ultimately flawed. This paper examines an innovative proposal in the form of mortgage contingent loans which could minimise government involvement, and therefore the risk to taxpayers.

Suggested Citation

  • Leo Dobes & Bruce Chapman, 2011. "Financing Adaptation to Climate-Induced Retreat from Coastal Inundation and Erosion," CCEP Working Papers 1113, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:ccepwp:1113

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    References listed on IDEAS

    1. Paul Raschky & Hannelore Weck-Hannemann, 2007. "Charity hazard - A real hazard to natural disaster insurance," Working Papers 2007-04, Faculty of Economics and Statistics, University of Innsbruck.
    2. Dwight M. Jaffee & Thomas Russell, 1996. "Catastrophe Insurance, Capital Markets and Uninsurable Risks," Center for Financial Institutions Working Papers 96-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
    4. Joseph J. Cordes & Anthony M. J. Yezer, 1998. "In Harm's Way: Does Federal Spending on Beach Enhancement and Protection Induce Excessive Development in Coastal Areas?," Land Economics, University of Wisconsin Press, vol. 74(1), pages 128-145.
    5. Wang, H. Holly, 2000. "Zone-Based Group Risk Insurance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
    6. Ritov, Ilana & Baron, Jonathan, 1992. "Status-Quo and Omission Biases," Journal of Risk and Uncertainty, Springer, vol. 5(1), pages 49-61, February.
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    1. New CCEP Working Papers
      by David Stern in Stochastic Trend on 2011-09-28 14:49:00

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy


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