Sunday, November 12, 2006

The cost of rising sea levels

A new study has suggested that perhaps the most severe impact of climate change will be rising sea levels. The report, by a team of German scientists, paints a rather gloomy picture of mass migration from low-lying areas and even recommends that countries should begin preparations now for a managed retreat. To an extent it would seem this is already happening;

The low-lying Pacific island nation of Tuvalu has already agreed a deal for New Zealand to take about half its 10,000 people to work in agriculture if it becomes swamped by rising sea levels.

The economic cost of sea level rises has always been difficult to quantify in studies such as the recent Stern report. The typical method has been to simply calculate the market price of the land that would be lost. In all reality this is likely to be a significant underestimate of the true cost given the likelihood of major migration, loss of livelihood and general adjustment costs. Furthermore, the unsavoury implication of using the market price method is that land in developed countries will have a much greater value than land in developing countries. This implies that the cost of sea level rises will be greater in developed countries and hence so too will be the justified expenditure to prevent such rises. Who is going to spend the vast sums of money needed to prevent the loss of 'cheap' land in Bangladesh for instance?

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