DISASTER IMPACT AND INPUT–OUTPUT ANALYSIS

Abstract

Macroeconomics models, such as the input–output model, the social accounting matrix, and the computable general equilibrium model, have been used for impact analysis of catastrophic disasters for some time. While the use of such models to disaster situation, which may quite differ from the ordinary economic setting, has been critiqued (for recent example, see Albala-Bertrand, 2013), there are still valuable reasons for the use of such models. In particular, such models can be used in order to quickly provide a ballpark estimate of the system-wide impact for recovery plan and finance and/or to evaluate disaster countermeasures in the pre-event period. This paper presents how these methodologies have evolved to incorporate with disaster-specific feature and discusses how far they still need to go from the current stage. This paper also serves as a preface to this special issue, which encompasses several papers devoted to the use of macroeconomic data and models to assess economic losses from disasters.

Keywords:

• Disaster impacts
• Input–output analysis

Acknowledgments

The authors are grateful to the editors in chief of this journal, Bart Los and Manfred Lenzen, for their encouragement, assistance, and endurance to this special issue. The authors also would like to thank the participants of the disaster sessions in the 21st International Input–Output Conference at Kitakyushu, Japan for the prudent discussions and insightful ideas.

Notes

¹The methodologies for impact estimation are categorized into two groups in Albala-Bertrand (2013): (a) black-box methods (notably econometrics) for long-run analysis and (b) simulation methods for short-run analysis. It is claimed that “(b)oth types of methods are somehow valuable, if only to call attention about certain aspects of the disaster phenomenon” (p. 10).

²The alternative analytical framework is proposed from the perspective of “a political economy argumentation … , as disaster responses represent discontinuities and ensuing societal network shifts” (Albala-Bertrand, 2013, p. 2).

³Hallegatte (2008) extended the IO framework, the adaptive input–output model, to incorporate production bottlenecks, changes in production capacity, and changes in prices, profits, and labor demand in somewhat ad hoc ways. However, these can be easily dealt with by the CGE model, which may be based on either IO or the social accounting matrix (SAM), and in a more theoretical way rather than an ad hoc way. In order to deal with demand–supply mismatch in the equilibrium-oriented IO framework, Uda (2011) proposed an iterative procedure to adjust input and interregional multipliers.

⁴The recovery from war destructions has been studied but not included in this paper (interested readers can refer to, for example, Davis and Weinstein, 2002; 2004; Miguel and Roland, 2005). Cavallo and Noy (2010) have an excellent summary of other studies on long-run impact of disasters.

⁵Chambers (1989) stated that the demands of poverty usually out-compete the demands of vulnerability in developing countries. Kahn (2005), Anbarci et al. (2005), Rashcky (2008), and Noy (2009) investigated the influence of institutional settings in their analysis of disaster impacts over cross-country data.