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

Author

Listed:
  • Tsvetan G. Tsvetanov

    () (University of Connecticut)

  • Farhed A. Shah

    () (University of Connecticut)

Abstract

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.

Suggested Citation

  • Tsvetan G. Tsvetanov & Farhed A. Shah, 2012. "The Economics of Protection against Sea-Level Rise: An Application to Coastal Properties in Connecticut," Working Papers 10, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  • Handle: RePEc:zwi:wpaper:10
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    File URL: http://www.zwickcenter.uconn.edu/documents/workingpaper10.pdf
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    References listed on IDEAS

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    8. 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.
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    More about this item

    Keywords

    climate change; sea-level rise; coastal flooding; coastal protection;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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