Adam Rose

DEFINING AND MEASURING ECONOMIC RESILIENCE TO DISASTERS

Three difficulties confront researchers in the resilience arena. At the conceptual level, there is the need to identify resilient actions, including those that may seem to violate established norms, such as rational behavior. At the operational level, it may be difficult to model individual, group, and community behavior in a single framework. At the empirical level, it is especially difficult to gather data on resilience to specify models. The purpose of this paper is to summarize progress on all three planes. First, defines several important dimensions of economic resilience to disasters. Second, shows how computable general equilibrium modeling represents a useful framework for analyzing the behavior of individuals, businesses, and markets. Third, summarizes recent progress in the conceptual and empirical modeling of resilience, including the incorporation of disequilibria and the recalibration of key behavioral parameters on the basis of empirical data. Fourth, uses the results of a case study to illustrate some important issues relating to the subject.

Input–Output Structural Decomposition Analysis: A Critical Appraisal

Over the past decade, input–output structural decomposition analysis (SDA) has developed into a major analytical tool. We review the development of SDA and its relationship to other methodologies. We present the fundamental principles of alternative approaches to deriving SDA estimating equations and explore the various decompositions of changes in IO tables. We also identify several complications and unresolved issues. Most importantly, we find that a rigorous grounding in economic theory is lacking for SDA, but we are able to offer some suggestions as to how it might be established.

Economic resilience to natural and man-made disasters: Multidisciplinary origins and contextual dimensions

Abstract Economic resilience is a major way to reduce losses from disasters. Its effectiveness would be further enhanced if it could be precisely defined and measured. This paper distinguishes static economic resilience—efficient allocation of existing resources—from dynamic economic resilience—speeding recovery through repair and reconstruction of the capital stock. Operational definitions are put forth that incorporate this important distinction. The consistency of the definitions is examined in relation to antecedents from several disciplines. The effectiveness of economic resilience is evaluated on the basis of recent empirical studies. In addition, its potential to be enhanced and eroded is analyzed in various contexts.

International Equity and Differentiation in Global Warming Policy

Abstractne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries. Long-standing tensions between industrialized and developing countries have raised the issue of equity in burden-sharing. Moreover, individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations. This paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits. A non-linear programming model, which distinguishes between allocation-based and outcome-based rules, is used to analyze the relative welfare outcomes. The model is applied to the world body of nations and yields several important policy implications.

Economic Principles, Issues, and Research Priorities in Hazard Loss Estimation

The quantification of economic losses from natural and manmade hazards is necessary to gauge individual and community vulnerability, evaluate the worthiness of mitigation, determine the appropriate level of disaster assistance, improve recovery decisions, and inform insurers of their potential liability. Several notable studies dealing with hazard loss estimation have recently been undertaken. These include chapters in surveys by the National Research Council (NRC, 1999; Mileti, 1999) and Heinz Center (2000), as well as various case studies (see, e.g., Cole, 1995; Tierney, 1997; Shinozuka et al., 1998; Gordon et al., 1998; Chang et al., 2001).

The Regional Economic Impact of an Earthquake: Direct and Indirect Effects of Electricity Lifeline Disruptions

This paper develops a methodology to estimate the regional economic impacts of electricity lifeline disruptions caused by a catastrophic earthquake. The methodology is based on specially designed input-output and linear programming models. A simulation of a major earthquake in the New Madrid Seismic Zone near Memphis, Tennessee, indicates the potential production loss over the recovery period could amount to as much as 7 percent of gross regional product. Reallocation of scarce electricity across sectors could reduce the impacts substantially. Additionally, an improved restoration pattern of electricity transmission substations across subareas could reduce losses even more.

Business interruption losses from natural hazards: conceptual and methodological issues in the case of the Northridge earthquake

This paper presents several refinements in a hazard loss estimation methodology and applies it to measuring business interruption losses from utility lifeline disruptions following the Northridge Earthquake. The analysis indicates that losses are highly sensitive to business resiliency. The results are then compared with survey-based estimates in an attempt at model validation.

Input–Output Analysis: The First Fifty Years

‘Input–Output economics is that rara avis in economics, a genuinely new and origznal idea. It was not without precursors and Leontief has always been at least adequately generous in acknowleding them…. The fundamental discovery that distinguished Leon- tiefs work from that of all his predecessors is that it was practical to calculate the input–output coefficients from recorded data, to perform the necessary algebraic manipu- lations, and to use the results to answer a wide variety of practical economic questions’ (Dorfman, 1973; pp. 430–31).

Input-output economics and computable general equilibrium models

Abstract This paper examines the broadening legacy of one of Wassily Leontiefs major contributions — input-output (I-O) analysis. It identifies ways in which I-O continues to evolve and to serve as a vital tool of economic analysis. Moreover, many features of I-O, both conceptual and empirical, have been incorporated into computable general equilibrium (CGE) models. As noted, there are some important differences between the two approaches. However, I-O and CGE have much in common in terms of questions addressed, data requirements, range of applications, and future conceptual refinements.

Sources of change in energy use in the U.S. economy, 1972-1982: A structural decomposition analysis

Abstract Energy use patterns in industrial nations have gone through dramatic changes over the past 20 years. This paper offers a major advance in the methodology of structural decomposition analysis (SDA) and applies it to the determination of the relative prominence of various ‘sources’ of change in energy use in intermediate sectors of the U.S. economy between 1972–1982. These sources correspond to the pure form of input changes in the context of production theory. We derive a mutually exclusive and completely exhaustive set of estimating equations at the level of detail of the two-tier KLEM production function. It is our contention that these equations can yield as much insight as more elaborate and data-intensive approaches utilizing flexible functional forms. Our results indicate that the major sources of upward pressure on energy use were economic growth, KLEM substitution, and the joint effects of technological change, while the major sources of downward pressure were energy conservation and technological change in materials.