Estimates of the economic effects of sea level rise

Regional estimates of direct cost (DC) are commonly used to measure the eco nomic damages of sea level rise. Such estimates suffer from three limitatio ns: (i) values of threatened endowments are not well known, (ii) loss of en dowments does not affect consumer prices, and (iii) international trade is disregarded. Results in this paper indicate that these limitations can sign ificantly affect economic assessments of sea level rise. Current uncertaint y regarding endowment values (as reflected in two alternative data sets), f or example, leads to a 17 percent difference in coastal protection, a 36 pe rcent difference in the amount of land protected, and a 36 percent differen ce in DC globally. Also, global losses in equivalent variation (EV), a welf are measure that accounts for price changes, are 13 percent higher than DC estimates. Regional EV losses may be up to 10 percent lower than regional D C, however, because international trade tends to redistribute losses from r egions with relatively high damages to regions with relatively low damages.