Modelling economic risk to sea-level rise and storms at the coastal margin

This paper utilises System Dynamics modelling and Scenario Planning through an Integrated Assessment Model (IAM) to assess how coastal hazards alter environment-economy system behaviour, which influences the decision-making of local communities. Specifically, it explores how a local economy may react under scenarios where governance interventions are not forthcoming and exposed communities continue to work and reside amid the growing spectre of increasing risk, damage and loss. 

The study results suggest that economic impacts from coastal hazards go beyond the simplistic vulnerability of capital and land assets because medium-term behavioural drivers in the economic system respond to long-term irreversible changes in the environmental system. Significantly, results indicate that the current trajectory of increasing capital valuations at the coast may be relatively short-lived. In the future, an increased understanding of the risk associated with SLR and storms will drive higher risk-based insurance premiums and excesses. Eventually, insurance market withdrawal drives vulnerable capital valuations downward.