Study shows indirect economic damages of sea level rise are higher than expected
A novel study shows that estimated indirect economic consequences of climate induced sea level rise are much higher than previous studies imply. A research team, consisting of four TPM researchers, the PBL Dutch Environmental Assessment Agency and the European Institute on Economics and the Environment in Italy looked at the impact on 271 European regions until 2100. It illustrates the differences in impacts across regions, and calls on policy-makers to take different adaptation measures in the face of these hazards to prevent costly retreat strategies in future. Their findings are published in Nature Scientific Reports.
‘Despite most of the population and industry globally clustering at the coasts, economic assessments of climate damages are typically done for entire continents or nations, implicitly assuming that the spatial distribution of these activities is even’, say researchers Ignasi Cortés Arbués and Tatiana Filatova. Theodoros Chatzivasileiadis, who is the linking pin between the PBL team and Delft Climate Action Programme, adds that ‘This has been one of the reasons why Europe-wide damages from climate-induced sea level rise in previous studies have been unrealistically low – just 0.5% GDP loss for extreme sea level rise in Europe by 2100, compared to our 1.3% GDP loss estimate – causing massive critique in the scientific literature and misguiding policy’.
Novel approach gives better insight indirect effects
Cortés Arbués explain that the main outcome of the research is the significant and uneven range of estimated GDP losses across the European coastline. ‘Only within Italy, we have found that there are regions that could lose almost 21% of their GDP due to sea level rise by 2100, while other regions could gain about 2.3%. A key novelty in our methodology is the use of sector-specific direct damages, which enable us to more accurately illustrate the overall damage to a region’s economy.’ Previous studies had distributed these direct damages according to the relative importance of a sector in an economy, while this novel approach uses historical flood data that more aptly capture the spatial distribution of damages. This is how the team estimated direct and indirect damages in a bottom up way. ‘This helps policymakers in identifying not only vulnerable regions, but also vulnerable industries within that region’, clarifies Servaas Storm.
Chatzivasileiadis: ‘When for example a factory is flooded, the products it manufactures are no longer available to consume. This is bad enough if the product is finished, but if it is an intermediate product (i.e., a microchip for a phone), it can create serious disruptions in a supply chain. This is why indirect effects are important to consider in climate damage quantification. By gaining more insight into how these damages will play out, we can enact better informed and more detailed adaptation policies that will increase economic resilience to climate change.’
Minimizing drastic impact
Filatova: ‘Our findings represent a first step for policymakers to allocate adaptation resources to the right regions in order to minimize drastic impacts. In addition, the inclusion of sector-specific loss estimates introduces an additional adaptation planning dimension, whereby forward-looking sea level adaptation could streamline current investments into different industries in a ‘climate-aware’ manner, preventing costlier retreat strategies in the future.’