Protection versus Retreat: The Economic Costs of Sea-Level Rise

Abstract

The author analyses the relative role of protection (or damage mitigation) expenditures within the total costs associated with raised sea levels induced by climate change. A rule of thumb is derived to approximate the optimal level of protection. Economic efficiency requires that protection expenditures are designed such that the sum of protection costs plus remaining land-loss damage is minimised. The optimal protection level will depend on the relative importance of dryland loss compared with the costs of accelerated wetland loss plus protection expenditures. This framework is then used to estimate the damage-cost functions associated with a sea-level rise for the countries of the OECD.