Evaluating the Economic Cost of Coastal Flooding

37 Pages Posted: 17 Sep 2018

See all articles by Klaus Desmet

Klaus Desmet

Southern Methodist University (SMU); Centre for Economic Policy Research (CEPR)

Robert E. Kopp

Rutgers, The State University of New Jersey - New Brunswick/Piscataway

Scott Kulp

Climate Central

Dávid Krisztián Nagy

Princeton University

Michael Oppenheimer

Princeton University - Woodrow Wilson School of Public and International Affairs

Esteban Rossi-Hansberg

Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Ben Strauss

Climate Central

Multiple version iconThere are 2 versions of this paper

Date Written: August 2018

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.

Keywords: coastal flooding, Geography, mobility, sea-level rise, Space, spatial growth models, Trade

JEL Classification: F18, F22, F43, Q51, Q54, Q56, R11

Suggested Citation

Desmet, Klaus and Kopp, Robert E. and Kulp, Scott and Nagy, Dávid Krisztián and Oppenheimer, Michael and Rossi-Hansberg, Esteban Alejandro and Strauss, Ben, Evaluating the Economic Cost of Coastal Flooding (August 2018). CEPR Discussion Paper No. DP13128. Available at SSRN: https://ssrn.com/abstract=3244500

Klaus Desmet (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Robert E. Kopp

Rutgers, The State University of New Jersey - New Brunswick/Piscataway ( email )

HOME PAGE: http://www.bobkopp.net/

Scott Kulp

Climate Central ( email )

One Palmer Square, Suite 402
Princeton, NJ 08542
United States

Dávid Krisztián Nagy

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Michael Oppenheimer

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Department of Geosciences
Princeton, NJ 08544-1021
United States
+1 609-258-2338 (Phone)

Esteban Alejandro Rossi-Hansberg

Princeton University - Department of Economics ( email )

Princeton, NJ
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ben Strauss

Climate Central ( email )

One Palmer Square, Suite 402
Princeton, NJ 08542
United States

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