Economic Justification for Action Now in Rhode Island

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  Economic Justification for Action Now in Rhode Island. What is the evidence that acting now saves money by James Neumann, Industrial Economics.
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  • 1. IEc INDUSTRIAL ECONOMICS, INCORPORATED Economic Justification for Action Now in Rhode Island James Neumann Principal Baird Sea Grant Science Symposium Newport, RI December 2014
  • 2. INDUSTRIAL ECONOMICS, INCORPORATED Overview and main messages • There are useful lessons from new efforts to explore economic implications of adaptation to coastal. • New greenhouse gas reduction actions will reduce the economic impact of sea-level rise and storm surge threats, but you’ll still need to adapt. • Adaptation has been shown to be cost-effective in many contexts – but you will need to start planning (and acting) now if you want the best “bang for the buck.” 2
  • 3. INDUSTRIAL ECONOMICS, INCORPORATED • Convening Lead Authors • Susi Moser (Susanne Moser Research & Consulting and Stanford University • Margaret Davidson (NOAA) • Lead authors • Paul Kirshen (UNH) • Peter Mulvaney (Green Lead Advisors) • Jim Murley (South Florida Regional Planning Council) • Jim Neumann (Industrial Economics, Inc.) • Laura Petes (NOAA) • Denise Reed (The Water Institute of the Gulf) Chapter 25: Coastal zone, development and ecosystems http://nca2014.globalchange.gov/report/regions/coasts
  • 4. INDUSTRIAL ECONOMICS, INCORPORATED Economic Disruption Nationally important assets, such as ports, tourism, and fishing sites, in already- vulnerable coastal locations, are increasingly exposed to sea level rise and related hazards. This threatens to disrupt economic activity within coastal areas and the regions they serve and results in significant costs from protecting or moving these assets.
  • 5. INDUSTRIAL ECONOMICS, INCORPORATED Coast-to-Inland Economic Connections
  • 6. INDUSTRIAL ECONOMICS, INCORPORATED Coast-to-Inland Economic Connections: Rhode Island 2007
  • 7. INDUSTRIAL ECONOMICS, INCORPORATED Coast-to-Inland Economic Connections: Rhode Island 2040
  • 8. INDUSTRIAL ECONOMICS, INCORPORATED How costs are reduced by GHG mitigation policy 8
  • 9. INDUSTRIAL ECONOMICS, INCORPORATED Economic implications for the US of adapting (or not) 9 Adaptation Option Scenario Discounted Cost (3% DR, billion 2005$, 2015 base year) Full Cost- Effective Adaptation Reference (BAU) $690 Mitigation Policy 3.7 $669 Benefits $21 Benefits (percent change) 3.0% No Adaptation or Protection Reference (BAU) $4,250 Mitigation Policy 3.7 $4,024 Benefits $226 Benefits (percent change) 5.3%
  • 10. INDUSTRIAL ECONOMICS, INCORPORATED Cumulative benefits of mitigation: economically efficient adaptation vs. no adaptation 10
  • 11. INDUSTRIAL ECONOMICS, INCORPORATED Area at risk of SLR and storm surge – Tampa area 11 With Rhode Island’s new mapping resources, this type of analysis can be easily conducted locally.
  • 12. INDUSTRIAL ECONOMICS, INCORPORATED What if Tampa adapts to these threats? 12
  • 13. INDUSTRIAL ECONOMICS, INCORPORATED Vulnerable assets in Rhode Island 13
  • 14. INDUSTRIAL ECONOMICS, INCORPORATED Vulnerable assets in Rhode Island • Property (residential, commercial, industrial, institutional) • Infrastructure (energy, transport, ports, bridges, sewerage/drainage, other utilities) • Secondary/indirect effects (e.g., business interruption, power outages, electric grid failure, transport infrastructure failures) • Recreation resources • Ecological resources (e.g., wetlands, fisheries) 14
  • 15. INDUSTRIAL ECONOMICS, INCORPORATED Adaptation response to SLR under reference scenario by 2100 Areas at risk of SLR under reference scenario by 2100
  • 16. INDUSTRIAL ECONOMICS, INCORPORATED Providence Kent Washington Bristol Newport Cumulative Damages under Reference Scenario (Undiscounted, Million 2005$)
  • 17. INDUSTRIAL ECONOMICS, INCORPORATED Risky Business Report • Risk Management Solutions (RMS) analysis examined what is at risk, with no adaptation • IEc analysis examined adaptation options using four scenarios: 1. No defensive investments (no adaptation) 2. Individual property owner action (e.g., elevation) 3. Property owner action plus beach nourishment 4. Property owner action, beach nourishment, and shoreline armoring • Key Finding 1: Costs increase as the options available to adapt decrease (highest cost for scenario 1, lowest for scenario 4) • Key Finding 2: The no adaptation option is four to six times higher cost than the full adaptation option 17
  • 18. INDUSTRIAL ECONOMICS, INCORPORATED 18
  • 19. INDUSTRIAL ECONOMICS, INCORPORATED 19
  • 20. INDUSTRIAL ECONOMICS, INCORPORATED 20 Important Results: 1. No strategies are cost- effective under current climate 2. All strategies cost- effective with mid- level SLR projection, particularly shoreline minimization (left map) and flood- proofing (right map) Source: Aerts et al., Science, 344: 473-475. 2 May 2014
  • 21. INDUSTRIAL ECONOMICS, INCORPORATED Take home messages • Don’t assume you can adapt to all climate change – there will be “residual risks” • The US is highly vulnerable, in economic terms, to coastal threats • Mitigating GHGs will help reduce the threat – but it will take time to have a significant impact • Adaptation in the coastal zone, in general, is a cost effective option, particularly in densely populated areas • The sooner you start, the better off you’ll be – the first step for Rhode Island is to tailor some of the existing work to support near-term decision-making 21
  • 22. INDUSTRIAL ECONOMICS, INCORPORATED 22 Thank You
  • 23. INDUSTRIAL ECONOMICS, INCORPORATED How did we think about economics and taking adaptation action in the IPCC report?
  • 24. INDUSTRIAL ECONOMICS, INCORPORATED 24 Potential for High Adaptive Capacity: Hurricane Ike, Gilchrist, TX
  • 25. INDUSTRIAL ECONOMICS, INCORPORATED 25 Potential for High Adaptive Capacity: Hurricane Ike, Gilchrist, TX
  • 26. INDUSTRIAL ECONOMICS, INCORPORATED What does it look like today? 26
  • 27. INDUSTRIAL ECONOMICS, INCORPORATED 27 Modeling Response to SLR Q1: Is cell elevation less than relative SL in that year? Q2: Is cell land and structure value more than protection cost (capital plus O&M)? Q3: Are any neighbors threatened? Q4: Is cell plus neighbor cells land and structure value more than cell plus neighbor protection cost? Yes Yes Yes Yes Not threatened No Abandon Cost = land + structure value No Elevate Cost = elevation cost for structure and some surrounding land NoNo Armor/Nourish Cost to armor = capital + annual O&M Cost to nourish = incremental sand cost, with new sand each decade
  • 28. INDUSTRIAL ECONOMICS, INCORPORATED Costs of efficient adaptations to SLR and storm surge 28
  • 29. INDUSTRIAL ECONOMICS, INCORPORATED Centimeters SLR for Providence and Newport Tide Gauges (Kopp et al., 2014) Providence Newport
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