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

• Published in: Environmental & resource economics Vol. 37; no. 3; pp. 549 - 571
• Main Authors: Bosello, Francesco, Roson, Roberto, Tol, Richard S. J
• Format: Journal Article
• Language: English
• Published: Dordrecht Dordrecht : Kluwer Academic Publishers 01-07-2007; European Association of Environmental and Resource Economists; Springer Nature B.V
• Series: Environmental & Resource Economics
• Subjects: Agricultural economics; Applied general equilibrium models; C68; Calibration; Capital stock; Climate change; Coastal zone management; Coasts; computable general equilibrium; Computational methods; Cost control; Cost estimates; D58; Economic impact; Economic impact analysis; Economic models; Economics; Emissions; Endowment; Energy consumption; Energy costs; Energy prices; Environmental economics; Environmental protection; Equilibrium; Farm buildings; Global economy; Greenhouse effect; Greenhouse gases; Impact analysis; impacts of climate change; Investments; Marine; Prices; Q25; Sea; Sea level; Sea level rise; Studies; Welfare; Welfare costs
• ISSN: 0924-6460; 1573-1502
• DOI: 10.1007/s10640-006-9048-5

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.