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The Economics of Protection against Sea-Level Rise: An Application to Coastal Properties in Connecticut

  • Tsvetan G. Tsvetanov

    ()

    (University of Connecticut)

  • Farhed A. Shah

    ()

    (University of Connecticut)

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    As a consequence of rising global sea levels, both the magnitude and frequency of coastal storms are expected to increase, which necessitates evaluating coastal flood adaptation measures. In this study, we conduct a benefit-cost analysis of coastal protection for 57 census blocks along the coast of Connecticut. The broad research question we address is whether benefits of coastal protection outweigh its costs. In cases where coastal armoring is desirable, our framework also allows us to determine the optimal timing of construction that maximizes expected net benefits. Our results suggest that in such cases coastal armoring can substantially alleviate the burden of total flood-related costs in the study area. The present value of cost savings due to coastal protection (relative to no protection) in the area over the next century amount to more than 26% with moderately high (physical, environmental, and amenity) costs and discount rate and range up to 41% under more conservative assumptions on the mod el parameters. Furthermore, the results we obtain imply that the optimal timing of protection may vary across different coastal regions.

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    File URL: http://www.zwickcenter.uconn.edu/documents/workingpaper10.pdf
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    Paper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Working Papers with number 10.

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    Length: 33 pages
    Date of creation: Oct 2012
    Date of revision:
    Handle: RePEc:zwi:wpaper:10
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    Web page: http://www.zwickcenter.uconn.edu
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    1. V. Bosetti & J.M. Conrad & E. Messinat, 2004. "The Value of Flexibility: Preservation, Remediation, or Development for Ginostra?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(2), pages 219-229, October.
    2. Koch, James V., 2010. "Costs of Defending Against Rising Sea Levels and Flooding in Mid-Atlantic Metropolitan Coastal Areas: The Basic Issues," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1).
    3. 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 S78-S97, November.
    4. Francesco Bosello & Robert Nicholls & Julie Richards & Roberto Roson & Richard Tol, 2012. "Economic impacts of climate change in Europe: sea-level rise," Climatic Change, Springer, vol. 112(1), pages 63-81, May.
    5. Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May.
    6. Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82.
    7. Morath, Florian, 2010. "Strategic information acquisition and the mitigation of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 206-217, March.
    8. Michael, Jeffrey A., 2007. "Episodic flooding and the cost of sea-level rise," Ecological Economics, Elsevier, vol. 63(1), pages 149-159, June.
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