Beyond Physical Damages: Indirect and Non-Market Impacts of Coastal Flooding and Implications for Economic Appraisal

Coastal flooding is expected to intensify under climate change, increasing risks to coastal communities, infrastructure, and ecosystems. While direct physical damages from flooding are routinely quantified and incorporated into economic appraisals, a wide range of indirect and non-market impacts remain weakly represented in decision-support frameworks. These impacts—affecting psychological well-being, cultural values, recreational opportunities, and social cohesion—can be substantial, persistent, and socially consequential, yet are often excluded due to conceptual and methodological challenges. This working paper provides an exploratory, structured synthesis of peer-reviewed evidence on indirect impacts of coastal flooding, with a focus on contexts relevant to Danish coastal management. Using an AI-supported literature search combined with manual screening and full-text assessment, the review organizes findings across four policy-relevant domains: (i) psychological and mental-health impacts, (ii) cultural services and amenity values, (iii) recreational access and tourism, and (iv) social cohesion and trust. Across all domains, the evidence indicates that indirect impacts constitute a significant component of total flood-related welfare losses and can influence recovery trajectories, adaptive capacity, and public acceptance of adaptation measures. The paper assesses the extent to which these impacts can be operationalized within economic appraisal, highlighting substantial gaps in standardized metrics and transferable valuation estimates. Psychological and recreational impacts appear most amenable to preference-based valuation, while cultural services and social cohesion present deeper challenges due to uniqueness, contextual dependence, and multidimensionality. The review concludes that current cost–benefit analyses are likely to underestimate the societal costs of flooding and that targeted, policy-oriented research—combining revealed and stated preference methods with institutional context—is needed to support more comprehensive and credible climate-adaptation decision-making.