Fiscal effects and the potential implications on economic growth of sea-level rise impacts and coastal zone protection

Authors: Parrado, R., Bosello, F., Delpiazzo, E., Hinkel, J., Lincke, D. and Brown, S.

Journal: Climatic Change

Volume: 160

Issue: 2

Pages: 283-302

eISSN: 1573-1480

ISSN: 0165-0009

DOI: 10.1007/s10584-020-02664-y

Abstract:

Climate change impacts on coastal zones could be significant unless adaptation is undertaken. One particular macroeconomic dimension of sea level rise (SLR) impacts that has received no attention so far is the potential stress of SLR impacts on public budgets. Adaptation will require increased public expenditure to protect assets at risk and could put additional stress on public budgets. We analyse the macroeconomic effects of SLR adaptation and impacts on public budgets. We include fiscal indicators in a climate change impact assessment focusing on SLR impacts and adaptation costs using a computable general equilibrium model extended with a detailed description of the public sector. Coastal protection expenditure is financed issuing government bonds, meaning that coastal adaptation places an additional burden on public budgets. SLR impacts are examined using several scenarios linked to three different Representative Concentration Pathways: 2.6, 4.5, and 8.5, and two Shared Socioeconomic Pathways: SSP2 and SSP5. Future projections of direct damages of mean and extreme SLR and adaptation costs are generated by the Dynamic Interactive Vulnerability Assessment framework. Without adaptation, all regions of the world will suffer a loss and public deficits increase respect to the reference scenario. Higher deficits imply higher government borrowing from household savings reducing available resources for private investments therefore decreasing capital accumulation and growth. Adaptation benefits result from two mechanisms: (i) the avoided direct impacts, and (ii) a reduced public deficit effect. This allows for an increased capital accumulation, suggesting that support to adaptation in deficit spending might trigger positive effects on public finance sustainability.

http://eprints.bournemouth.ac.uk/33317/

Source: Scopus

Fiscal effects and the potential implications on economic growth of sea-level rise impacts and coastal zone protection

Authors: Parrado, R., Bosello, F., Delpiazzo, E., Hinkel, J., Lincke, D. and Brown, S.

Journal: CLIMATIC CHANGE

Volume: 160

Issue: 2

Pages: 283-302

eISSN: 1573-1480

ISSN: 0165-0009

DOI: 10.1007/s10584-020-02664-y

http://eprints.bournemouth.ac.uk/33317/

Source: Web of Science (Lite)

Fiscal effects and the potential implications on economic growth of sea level rise impacts and coastal zone protection

Authors: Parrado, R., Bosello, F., Delpiazzo, E., Brown, S., Hinkel, J. and Lincke, D.

Journal: Climatic Change

Abstract:

Climate change impacts on coastal zones could be significant unless adaptation is undertaken. One particular macro-economic dimension of sea level rise (SLR) impacts that has received no attention so far is the potential stress of SLR impacts on public budgets. Adaptation will require increased public expenditure to protect assets at risk and could put additional stress on public budgets. We analyse the macroeconomic effects of SLR adaptation and impacts on public budgets. We include fiscal indicators in a climate change impact assessment focusing on SLR impacts and adaptation costs using a computable general equilibrium model extended with a detailed description of the public sector. Coastal protection expenditure is financed issuing government bonds, meaning that coastal adaptation places an additional burden on public budgets. SLR impacts are examined using several scenarios linked to three different Representative Concentration Pathways: 2.6, 4.5 and 8.5, and two Shared Socio-economic Pathways: SSP2 and SSP5. Future projections of direct damages of mean and extreme SLR and adaptation costs are generated by the Dynamic Interactive Vulnerability Assessment framework. Without adaptation, all world regions suffer a loss and public deficits increase respect to the reference scenario. Higher deficits imply higher government borrowing from household savings reducing available resources for private investments therefore decreasing capital accumulation and growth. Adaptation benefits result from two mechanisms: i) the avoided direct impacts, and ii) a reduced public deficit effect. This allows for an increased capital accumulation, suggesting that support to adaptation in deficit spending might trigger positive effects on public finance sustainability.

http://eprints.bournemouth.ac.uk/33317/

Source: Manual