Climate Change 2001:
Working Group II: Impacts, Adaptation and Vulnerability
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6.5.2. Economic Costs of Sea-Level Rise

In the early 1990s, several studies examined the cost of sea-level rise in the United States, based on uniform national response strategies of holding back the sea (Titus et al., 1992) or not holding back the sea (Yohe, 1990). A series of nationwide studies in other countries (see Bijlsma et al., 1996) followed much the same approach. Turner et al. (1995) attempted to assess the cost of sea-level rise in general. Yohe et al. (1996) analyzed the economic cost of sea-level rise for developed property in the United States. They conclude that their cumulative figure of US$20.4 billion (1990 US$) cumulative is much lower than earlier estimates because those estimates had not considered offsetting factors, such as the cost-reducing potential of natural, market-based, adaptation measures or the efficiency of discrete decisions to protect (or not to protect) small tracts of property on the basis of individual economic merit. In most analyses, those "offsetting factors," or adaptations, are shore protection works. The expected economic cost of protection or abandonment in the United States also has been assessed (Yohe and Schlesinger, 1998).

Saizar (1997) assesses the potential impacts of a 0.5-m sea-level rise on the coast of Montevideo, Uruguay. Given no adaptive response, the cost of such a rise is estimated to be US$23 million, with a shoreline recession of 56 m and loss of only 6.8 ha of land. Olivo (1997) determined the potential economic impacts of a sea-level rise of 0.5 m on the coast of Venezuela. At six study sites, he identified land and infrastructure at risk—such as oil infrastructure, urban areas, and tourist infrastructure—and, after evaluating four scenarios, concludes that Venezuela cannot afford the costs of sea-level rise, either in terms of land and infrastructure lost under a no-protection policy or in terms of the costs involved in any of three protection policies. In Poland, Zeider (1997) estimates the total cost of land-at-loss at US$30 billion; the cost of full protection for the 2,200 km of coast would be US$6 billion.

Several different methods have been used to estimate economic costs. Yohe and Neumann (1997) focus attention on the cost-benefit procedures applied by coastal planners to evaluate shoreline protection projects in relation to sea-level rise. They develop three alternative adaptive responses to the inundation threat from climate-induced sea-level rise: cost-benefit with adaptation foresight (CBWAF), cost-benefit absent adaptation (CBAA), and protection guaranteed (PG). On economic grounds, CBWAF became the preferred option; CBAA conforms most closely with the routine application of existing procedures. "Adaptation foresight" in Yohe and Neumann's cost-benefit procedures assumes that erosion resulting from sea-level rise is a gradual process and that storm impacts do not change as sea level rises. West and Dowlatabadi (1999) suggest, however, that although a rise in sea level may be gradual and predictable, the effects of storms on coastal shorelines and structures are often stochastic and uncertain, in part because of sea-level rise effects.

Sea-level rise can increase the damage caused by storms because mean water level (the base level for storm effects) is higher, waves can attack higher on the shore profile, and coastal erosion often is accelerated, bringing structures nearer the shoreline and potentially removing protection offered by dunes and other protective features. The Heinz Center (2000) estimates that roughly 1,500 homes in the United States will be lost to coastal erosion each year for several decades, at a cost to property owners of US$530 million yr-1. Most of the losses over the next 60 years will be in low-lying areas that also are subject to flooding, although some damage will be along eroding bluffs or cliffs. West et al. (2001) estimate that the increase in storm damage because of sea-level rise increases the direct damages of sea-level rise from erosion of the shoreline by 5%, but storm damage could be as much as 20% of other sea-level rise damages. They also developed a method for evaluating the effects of investor decisions to repair storm damage on the net economic impacts of rising sea level in the United States. Neumann et al. (2000) have estimated that a 0.5-m sea-level rise by 2100 could cause cumulative impacts to U.S. coastal property of US$20 billion to US$150 billion and that more extensive damage could result if climate change increases storm frequency or intensity.

Morisugi et al. (1995) attempt to evaluate the household damage cost in Japan from increased storm surges and the potential benefit generated by countermeasures, using a microeconomic approach. In this approach, household utility is expressed as a function of disaster occurrence probability, income, and other variables, and the change of utility level from sea-level rise and/or countermeasures is translated into monetary terms. For a 0.5-m sea-level rise, the damage cost without countermeasures in Japan would be about US$3.4 billion yr-1, based on the comparison of the utility level between no sea-level rise and a 0.5-m sea-level rise without countermeasures. When the utility level is calculated for the case with countermeasures, the damage cost is reduced to about -US$1.3 billion yr-1, which means that a benefit is created. Therefore, the benefit created by countermeasures for a 0.5-m sea-level rise, which is defined as the decrease of damage cost, would be about US$4.7 billion yr-1 at the national level. Because the annual expense for countermeasures is estimated to be about US$1.9 billion yr-1 (Mimura et al., 1998), the countermeasures are still beneficial after expenses are considered. This and other examples given here suggest that more robust assessments of the economic impacts of sea-level rise are possible and that they can improve the quality of adaptation strategies.

6.5.3. Impacts on Coastal Infrastructure

A large portion of the human population now lives in coastal areas, and the rate of population growth in these areas is higher than average (Cohen et al., 1997; Gommes et al., 1998). Many large cities are located near the coast (e.g., Tokyo, Shanghai, Jakarta, Bombay, New York), and Nicholls and Mimura (1998) have argued that the future of the subsiding megacities in Asia, particularly those on deltas, is among the most challenging issues relating to sea-level rise. People in developed coastal areas rely heavily on infrastructure to obtain economic, social, and cultural benefits from the sea and to ensure their safety against natural hazards such as high waves, storm surges, and tsunamis. Their well-being is supported by systems of infrastructure that include transportation facilities, energy supply systems, disaster prevention facilities, and resorts in coastal areas. Significant impacts of climate change and sea-level rise on these facilities would have serious consequences (see Chapter 7). This analysis applies not only in highly developed nations but in many developing economies and small island states (Nunn and Mimura, 1997). The vulnerability of waste facilities, septic systems, water quality and supply, and roads is a particular concern in many places (Solomon and Forbes, 1999).

Mimura et al. (1998) summarize Japanese studies on the impacts on infrastructure. Several studies suggested that disaster prevention facilities such as coastal dikes, water gates, and drainage systems and coastal protection structures such as seawalls, breakwaters, and groins will become less functional because of sea-level rise and may lose their stability. A common concern relates to the bearing capacity of the soil foundation for structures. For instance, the increased water table resulting from sea-level rise decreases the bearing capacity of the soil foundation and increases the possibility of liquefaction, which results in higher instability of coastal infrastructures to earthquakes (Shaw et al., 1998a). In the United Kingdom, sea defenses and shore protection works around 4,300 km of coast cost approximately US$500 million yr-1 to maintain at present— a figure that Turner et al. (1998) suggest will continue to rise in the future.

Port facilities are another type of infrastructure that will be affected by climate change and sea-level rise. Higher sea level probably will decrease the effectiveness of breakwaters against wave forces, and wharves may have to be raised to avoid inundation. When such effects are anticipated, countermeasures can be implemented to maintain function and stability. Therefore, the real impacts will occur as an additional expenditure to reinforce the infrastructure. The total expenditure to keep the present level of functions and stability for about 1,000 Japanese ports is estimated to be US$110 billion for a 1-m sea-level rise (Mimura et al., 1998).

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