Cost-Benefit Analysis of Seawalls in South Korea: A Bottom-Up Assessment

We present a cost-benefit analysis of coastal protection via seawalls in South Korea against climate-change-induced sea level rise. This is the first bottom-up analysis for South Korea, deriving the optimal solution from extensive geographical and financial databases with detailed street-address-level information. Our analysis indicates that the net benefit is maximized if seawalls are built along 21% of the South Korean coast. By comparing the bottom-up solution to the aggregate solution and utilizing a comprehensive sensitivity analysis, we highlight two implications for the climate change economics literature. First, the country-level aggregate analysis adopted by many existing studies may include a sizable aggregation bias. Second, relative to the climate change mitigation problem, the coastal protection problem is less sensitive to the choice of the discount rate.