Clare Balboni, MIT
Time & Location
About the Event
Coasts contain a disproportionate share of the world’s population, reflecting historical advantages,
but environmental change threatens a reversal of coastal fortune in the coming decades
as natural disasters intensify and sea levels rise. This paper considers whether large infrastructure
investments should continue to favour coastal areas. I use a dynamic spatial equilibrium
framework and detailed georeferenced data from Vietnam to examine this issue and find evidence
that coastal favouritism has significant costs. Road investments concentrated in coastal
regions between 2000 and 2010 had positive returns but would have been outperformed by allocations
concentrated further inland even in the absence of sea level rise. Future inundation
renders the status quo significantly less efficient. Under a central sea level rise scenario, welfare
gains 72% higher could have been achieved by a foresighted allocation avoiding the most vulnerable
regions. The results highlight the importance of accounting for the dynamic effects of
environmental change in deciding where to allocate infrastructure today.