FIGURE 5.6 Vulnerability of capital stocks is higher with reduced warning times and longer lifetimes. The fraction of the value of capital stock that is destroyed or becomes obsolete is a function of the lifetime of the capital stock and the warning time. For an abrupt change that makes the capital completely obsolete, 82 percent of the value is lost for capital with 100-year lifetime and 20 year warning time (A) (top line). For shorter lifetime of 20 years at point B, only 14 percent of the value is lost (bottom line). Note that for a gradual climate change with warning times of at least 100 years, relatively little value is lost even for long-lived capital.

Schlesinger, 1998). This study compared the economic losses from perfectly anticipated and completely unanticipated sea-level rise scenarios ranging from 10 to 90 centimeters over the next 100 years. This example is particularly interesting because the capital stocks involved are long-lived compared to the average reproducible capital stock and coastal structures are among the most vulnerable and immobile capital stocks in our economy.

As would be expected, the results show that the high sea-level-rise scenarios show much higher damages (Table 5.1). Under perfect foresight, the property owner is assumed to optimize the depreciation schedule in light of the need for abandonment when sea-level-rise makes the structure uninhabitable (Table 5.1). Under the myopic case, the owner continues to operate and maintain the dwelling assuming no sea-level-rise until forced to abandon. The ratio of the myopic to the perfect-foresight case ranges from 1.02 for 2050 with slow sea-level-rise to 1.49 for 2100 and the rapid sea-level-rise case (Table 5.1). The interpretation is that, without adaptation, a sea-



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