IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/126336.html
   My bibliography  Save this paper

In harm's way? Infrastructure investments and the persistence of coastal cities

Author

Listed:
  • Balboni, Clare

Abstract

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 favor coastal areas. I estimate a dynamic spatial equilibrium framework using detailed geo-referenced data on road investments in Vietnam from 2000 to 2010 and find evidence that coastal favoritism has significant costs. The results highlight the importance of accounting for the dynamic effects of environmental change in deciding where to allocate infrastructure today.

Suggested Citation

  • Balboni, Clare, 2025. "In harm's way? Infrastructure investments and the persistence of coastal cities," LSE Research Online Documents on Economics 126336, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126336
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/126336/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Klaus Desmet & Robert E. Kopp & Scott A. Kulp & Dávid Krisztián Nagy & Michael Oppenheimer & Esteban Rossi-Hansberg & Benjamin H. Strauss, 2021. "Evaluating the Economic Cost of Coastal Flooding," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(2), pages 444-486, April.
    2. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1339-1398, Elsevier.
    3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    4. Au, Chun-Chung & Henderson, J. Vernon, 2006. "How migration restrictions limit agglomeration and productivity in China," Journal of Development Economics, Elsevier, vol. 80(2), pages 350-388, August.
    5. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    6. Moritz A. Drupp & Mark C. Freeman & Ben Groom & Frikk Nesje, 2018. "Discounting Disentangled," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 109-134, November.
    7. Krugman, Paul, 1991. "History and Industry Location: The Case of the Manufacturing Belt," American Economic Review, American Economic Association, vol. 81(2), pages 80-83, May.
    8. Hoyt Bleakley & Jeffrey Lin, 2012. "Portage and Path Dependence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 587-644.
    9. Treb Allen & Costas Arkolakis, 2014. "Trade and the Topography of the Spatial Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1085-1140.
    10. Trevor Tombe & Xiaodong Zhu, 2019. "Trade, Migration, and Productivity: A Quantitative Analysis of China," American Economic Review, American Economic Association, vol. 109(5), pages 1843-1872, May.
    11. Benjamin Faber & Cecile Gaubert, 2019. "Tourism and Economic Development: Evidence from Mexico's Coastline," American Economic Review, American Economic Association, vol. 109(6), pages 2245-2293, June.
    12. Raymond J. Burby, 2006. "Hurricane Katrina and the Paradoxes of Government Disaster Policy: Bringing About Wise Governmental Decisions for Hazardous Areas," The ANNALS of the American Academy of Political and Social Science, , vol. 604(1), pages 171-191, March.
    13. Konstantin Kucheryavyy & Gary Lyn & Andrés Rodríguez-Clare, 2023. "Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 372-412, April.
    14. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.
    15. Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, American Economic Association, vol. 108(12), pages 3855-3890, December.
    16. Baum-Snow, Nathaniel & Henderson, J. Vernon & Turner, Matthew A. & Zhang, Qinghua & Brandt, Loren, 2020. "Does investment in national highways help or hurt hinterland city growth?," Journal of Urban Economics, Elsevier, vol. 115(C).
    17. Kunreuther, Howard, 1996. "Mitigating Disaster Losses through Insurance," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 171-187, May.
    18. Benson, Earl D & Hansen, Julia L. & Schwartz Jr., Arthur & Smersh, Greg T., 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
    19. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    20. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
    21. Stephen Conroy & Jennifer Milosch, 2011. "An Estimation of the Coastal Premium for Residential Housing Prices in San Diego County," The Journal of Real Estate Finance and Economics, Springer, vol. 42(2), pages 211-228, February.
    22. Valerie Kozel, 2014. "Well Begun but Not Yet Done : Progress and Emerging Challenges for Poverty Reduction in Vietnam," World Bank Publications - Books, The World Bank Group, number 20074.
    23. Miguel, Edward & Roland, Gérard, 2011. "The long-run impact of bombing Vietnam," Journal of Development Economics, Elsevier, vol. 96(1), pages 1-15, September.
    24. Pablo D. Fajgelbaum & Edouard Schaal, 2020. "Optimal Transport Networks in Spatial Equilibrium," Econometrica, Econometric Society, vol. 88(4), pages 1411-1452, July.
    25. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
    26. Bilal, Adrien & Rossi-Hansberg, Esteban, 2023. "Anticipating Climate Change Across the United States," CEPR Discussion Papers 18192, C.E.P.R. Discussion Papers.
    27. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    28. Jacob Vigdor, 2008. "The Economic Aftermath of Hurricane Katrina," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 135-154, Fall.
    29. Lorenzo Caliendo & Maximiliano Dvorkin & Fernando Parro, 2019. "Trade and Labor Market Dynamics: General Equilibrium Analysis of the China Trade Shock," Econometrica, Econometric Society, vol. 87(3), pages 741-835, May.
    30. Brian McCaig & Nina Pavcnik, 2013. "Moving out of Agriculture: Structural Change in Vietnam," NBER Working Papers 19616, National Bureau of Economic Research, Inc.
    31. Fujita, Masahisa & Mori, Tomoya, 1996. "The role of ports in the making of major cities: Self-agglomeration and hub-effect," Journal of Development Economics, Elsevier, vol. 49(1), pages 93-120, April.
    32. Erhan Artuç & Shubham Chaudhuri & John McLaren, 2010. "Trade Shocks and Labor Adjustment: A Structural Empirical Approach," American Economic Review, American Economic Association, vol. 100(3), pages 1008-1045, June.
    33. P. S. J. Minderhoud & L. Coumou & G. Erkens & H. Middelkoop & E. Stouthamer, 2019. "Mekong delta much lower than previously assumed in sea-level rise impact assessments," Nature Communications, Nature, vol. 10(1), pages 1-13, December.
    34. Sanne Muis & Martin Verlaan & Hessel C. Winsemius & Jeroen C. J. H. Aerts & Philip J. Ward, 2016. "A global reanalysis of storm surges and extreme sea levels," Nature Communications, Nature, vol. 7(1), pages 1-12, September.
    35. Sanne Muis & Martin Verlaan & Hessel C. Winsemius & Jeroen C. J. H. Aerts & Philip J. Ward, 2016. "Correction: Corrigendum: A global reanalysis of storm surges and extreme sea levels," Nature Communications, Nature, vol. 7(1), pages 1-1, December.
    36. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    37. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    38. Feng Xie & David M. Levinson, 2011. "Evolving Transportation Networks," Transportation Research, Economics and Policy, Springer, number 978-1-4419-9804-0, June.
    39. World Bank, 2010. "World Development Indicators 2010," World Bank Publications - Books, The World Bank Group, number 4373.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    2. Redding, Stephen, 2020. "Trade and Geography," CEPR Discussion Papers 15268, C.E.P.R. Discussion Papers.
    3. Dávid Nagy, 2020. "Hinterlands, City Formation and Growth: Evidence from the U.S. Westward Expansion," Working Papers 1172, Barcelona School of Economics.
    4. Stephan Heblich & Stephen J Redding & Daniel M Sturm, 2020. "The Making of the Modern Metropolis: Evidence from London," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 2059-2133.
    5. Ducruet, César & Juhász, Réka & Nagy, Dávid Krisztián & Steinwender, Claudia, 2024. "All aboard: The effects of port development," Journal of International Economics, Elsevier, vol. 151(C).
    6. Rodrigo Adão & Costas Arkolakis & Federico Esposito, 2019. "General Equilibrium Effects in Space: Theory and Measurement," NBER Working Papers 25544, National Bureau of Economic Research, Inc.
    7. Rodrigo Ad'o & Costas Arkolakis & Federico Esp'sito, 2019. "Spatial Linkages, Global Shocks, and Local Labor Markets: Theory and Evidence," Cowles Foundation Discussion Papers 2163, Cowles Foundation for Research in Economics, Yale University.
    8. Lorenzo Caliendo & Luca David Opromolla & Fernando Parro & Alessandro Sforza, 2021. "Goods and Factor Market Integration: A Quantitative Assessment of the EU Enlargement," Journal of Political Economy, University of Chicago Press, vol. 129(12), pages 3491-3545.
    9. Hsu, Wen-Tai & Ma, Lin, 2021. "Urbanization policy and economic development: A quantitative analysis of China's differential hukou reforms," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    10. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1339-1398, Elsevier.
    11. Dávid Nagy, 2021. "Quantitative Economic Geography Meets History: Questions, Answers and Challenges," Working Papers 1249, Barcelona School of Economics.
    12. Ma, Lin & Tang, Yang, 2024. "The distributional impacts of transportation networks in China," Journal of International Economics, Elsevier, vol. 148(C).
    13. Blouri, Yashar & Ehrlich, Maximilian V., 2020. "On the optimal design of place-based policies: A structural evaluation of EU regional transfers," Journal of International Economics, Elsevier, vol. 125(C).
    14. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.
    15. Stephen J. Redding, 2022. "Suburbanization in the USA, 1970–2010," Economica, London School of Economics and Political Science, vol. 89(S1), pages 110-136, June.
    16. David Krisztián Nagy, 2020. "Quantitative economic geography meets history: Questions, answers and challenges," Economics Working Papers 1774, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2021.
    17. David Krisztián Nagy, 2020. "Trade and urbanization: Evidence from Hungary," Economics Working Papers 1858, Department of Economics and Business, Universitat Pompeu Fabra.
    18. Clare Balboni, 2025. "In Harm's Way? Infrastructure Investments and the Persistence of Coastal Cities," American Economic Review, American Economic Association, vol. 115(1), pages 77-116, January.
    19. Pablo D. Fajgelbaum & Edouard Schaal, 2020. "Optimal Transport Networks in Spatial Equilibrium," Econometrica, Econometric Society, vol. 88(4), pages 1411-1452, July.
    20. César Ducruet & Réka Juhász & David Krisztián Nagy & Claudia Steinwender, 2019. "All aboard: The aggregate effects of port development," Economics Working Papers 1708, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2022.

    More about this item

    Keywords

    transport infrastructure; regional development; natural disaster risk; climate change; path dependence; spatial misallocation; sea level; floods; Vietnam; UKRI rights retention;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:126336. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.