The Economic Value of Delaying Adaptation to Sea-Level Rise: An Application to Coastal Properties in Connecticut

The magnitude and frequency of coastal storms are expected to increase with rising global sea levels, which necessitates evaluating coastal flood adaptation measures. This study examines an important issue in the context of coastal flood protection, namely, the decision when to adopt protection measures. For any given coastal region, our benefit-cost framework allows us to determine the optimal timing of initiating protection that maximizes expected net benefits. We present an application of this framework to a coastal area in Connecticut. Our results suggest that the optimal timing of adopting protection may vary across different census blocks within the study area. We find that using a relatively low discount rate in the benefit-cost analysis implies greater heterogeneity in the timing decisions and earlier overall adoption, whereas, with higher discount rates, the timing decisions are reduced to a choice between early protection and no protection at all. If possible negative environmental and aesthetic impacts of sea barriers are taken into account, delaying protection would become more desirable, with the extent of delay being sensitive to the relative magnitude of one-time costs (e.g., loss of ocean view and recreational opportunities) vs. continuous costs (e.g., shoreline erosion and loss of wetlands).

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Working or Discussion Paper
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JEL Codes:
D61; D82; Q54; Q58
An earlier version of this paper was circulated as “The Economics of Protection against Sea-Level Rise: An Application to Coastal Properties in Connecticut.” (October 5, 2012)
Series Statement:
Working Papers

 Record created 2017-04-01, last modified 2020-10-28

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