Climate change economics on a small island: new approaches for Tobago

Abstract:

For small islands like Tobago that depend heavily on tourism driven by their natural 'beauty'€” climate change poses a double-edged threat on supply and demand. Rising sea levels, increasing temperatures and more frequent and intense storms will damage the island's natural assets, such as coral reefs and beaches. This could have a heavy impact on tourism, which will also be affected by climate policy in '€˜source'€™ countries. But what exactly will that impact be? How much will it cost? And what can be done about it? Traditional economic analysis is ill-equipped to answer these questions because it offers static and highly uncertain models and assessments of damage and loss, rather than flexible response options that consider system dynamics. We urgently need to use and expand new forms of economic analysis to better support the difficult decisions that Caribbean policymakers face as a result of climate change.