A stepwise approach for identifying climate change induced socio-economic tipping points

Climate change may cause socio-economic tipping points (SETPs), where the state of a socio-economic system abruptly changes to a fundamentally different state. While their potential existence is recognized, a systematic method for policy-relevant research on SETPs is lacking. This study introduces a stepwise approach for identification of SETPs that supports decision making under uncertain climate and socio-economic conditions. The approach is demonstrated with a stylized case study on the collapse of house prices (a SETP) in a coastal city, due to increasing flood risk from sea level rise. We explore four dynamic adaptive management strategies under a wide range of possible futures. We find that under scenarios with very high and rapid sea level rise, tipping points in real estate prices occur if the market responds to sudden changes in perceived flood risk rather than gradually adjusting prices to changes in flood risk in a rational manner. Such SETPs can only be avoided with a proactive strategy and when flood protection measures are implemented rapidly. Our approach can guide future studies on SETPs and seeks to move the study of SETPs towards a concept that provides perspective of action for policy makers.