PROTECTION VS . RETREAT : ESTIMATING THE COSTS OF SEA LEVEL RISE by Samuel Fankhauser

This paper analyses the relative role of protection and mitigation expenditures within the total costs of climate change induced sea level rise. It derives a rule of thumb to approximate the optimal level of protection. Economic efficiency requires that protection expenditures are designed such that the sum of protection costs plus remaining land loss damage is minimised. A formula is derived according to which the optimal protection level depends on the relative importance of dryland loss compared to the costs of accelerated wetland loss plus protection expenditures. This framework is then used to estimate sea level rise damage cost functions for the countries of the OECD.