Sea level rise poses an existential threat to Jakarta, which faces frequent and worsening flooding. The government has responded with a proposed sea wall. In this setting, I study how government intervention complicates long-run adaptation to climate change. I show that government intervention creates coastal moral hazard, and I quantify this force with a dynamic spatial model in which developers and residents act with flood risk in mind. I find that moral hazard generates severe lock-in and limits migration inland, even over the long run.

Link to working paper: https://allanhsiao.com/files/Hsiao_jakarta.pdf

The David Bradford Energy and Environmental Policy Seminar Series is coordinated by the Center for Policy Research on Energy and the Environment (C-PREE), and co-sponsored by the High Meadows Environmental Institute (HMEI). This seminar is also co-sponsored by the Andlinger Center for Energy and the Environment, the Department of Economics, and the Griswold Center for Economic Policy Studies.

This in-person event is open to the Princeton University community. Members of the public may watch the seminar over livestream at http://mediacentrallive.princeton.edu/