Thinking about Imbalances in Post-catastrophe Economies: An Input-Output based Proposition

Authors: Steenge, Albert E.¹; Bockarjova, Marija²

Source: Economic Systems Research, Volume 19, Number 2, June 2007 , pp. 205-223(19)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

In this paper we focus on the consequences of a major catastrophe for a modern economy, where 'major' means that a significant part of the economy's productive capacity is lost. In the aftermath of the catastrophe, authorities have to address a great number of issues. We show, using basic principles, that input-output methodology offers a flexible set of tools to address three fundamental issues: (1) obtaining a systematic insight in the imbalances that exist in the non-affected area after the catastrophe, (2) determining the nature of these imbalances and the way they affect options in the recovery process, and (3) introducing the elements of a cost-benefit analysis in the context of prevention and precautionary policies. Our approach strongly supports the need for extensive contingency planning in the presence of major natural hazards. A numerical example accompanies the various steps of the exercise.

Keywords: Disaster; input-output analysis; economic network; cost-benefit analysis

Document Type: Research article

DOI: http://dx.doi.org/10.1080/09535310701330308

Affiliations: 1: School of Management and Governance, and Institute for Governance Studies, University of Twente, Enschede, the Netherlands 2: Department of Spatial Economics, Faculty of Economics and Public Administration, Free University of Amsterdam, the Netherlands

Publication date: 2007-06-01

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