Vanessa N. Vargas

Decision framework for evaluating the macroeconomic risks and policy impacts of cyber attacks

Abstract Increased reliance on the Internet for critical infrastructure and the global nature of supply chains provides an opportunity for adversaries to leverage dependencies and gain access to vital infrastructure. Traditional approaches to assessing risk in the cyber domain, including estimation of impacts, fall short due to uncertainty in how interconnected systems react to cyber attack. This paper describes a method to represent the pathways of disruption propagation, evaluate the macroeconomic impact of cyber threats and aid in selecting among various cybersecurity policies. Based on state of the art agent-based modeling, multicriteria decision analysis, and macroeconomic modeling tools, this framework provides dynamic macroeconomic, demographic and fiscal insights regarding shocks caused by cyber attacks to the regional economy over time. The interlinkage of these models will provide a robust and adaptive system that allows policy makers to evaluate complex issues such as cybersecurity threats and their impacts on the geopolitical, social, environmental, and macroeconomic landscape.

Creating interaction environments: defining a two-sided market model of the development and dominance of platforms

Interactions between individuals, both economic and social, are increasingly mediated by technological systems. Such platforms facilitate interactions by controlling and regularizing access, while extracting rent from users. The relatively recent idea of two-sided markets has given insights into the distinctive economic features of such arrangements, arising from network effects and the power of the platform operator. Simplifications required to obtain analytical results, while leading to basic understanding, prevent us from posing many important questions. For example we would like to understand how platforms can be secured when the costs and benefits of security differ greatly across users and operators, and when the vulnerabilities of particular designs may only be revealed after they are in wide use. We define an agent-based model that removes many constraints limiting existing analyses (such as uniformity of users, free and perfect information), allowing insights into a much larger class of real systems.

Energy and water sector policy strategies for drought mitigation.

Tensions between the energy and water sectors occur when demand for electric power is high and water supply levels are low. There are several regions of the country, such as the western and southwestern states, where the confluence of energy and water is always strained due to population growth. However, for much of the country, this tension occurs at particular times of year (e.g., summer) or when a region is suffering from drought conditions. This report discusses prior work on the interdependencies between energy and water. It identifies the types of power plants that are most likely to be susceptible to water shortages, the regions of the country where this is most likely to occur, and policy options that can be applied in both the energy and water sectors to address the issue. The policy options are designed to be applied in the near term, applicable to all areas of the country, and to ease the tension between the energy and water sectors by addressing peak power demand or decreased water supply.

REAcct: a scenario analysis tool for rapidly estimating economic impacts of major natural and man-made hazards

The REAcct (for Regional Economic Accounting) tool was developed for estimating order-of-magnitude economic impacts within DHS scenario analysis. REAcct uses input–output modeling, geo-spatial data computational tools, and publically available economic data and allows for detailed specification of sectors, regions, and disruption intervals. Direct impacts are estimated as changes in output and employment; total (direct plus indirect) impacts are calculated using regional total and final demand multipliers. In total, the REAcct framework and software allow for scenario analysts to understand and assess the interdependent relationships between critical infrastructures, economic industries, and consumers that are essential to broader homeland security scenario analysis.

Economics definitions, methods, models, and analysis procedures for Homeland Security applications.

This report gives an overview of the types of economic methodologies and models used by Sandia economists in their consequence analysis work for the National Infrastructure Simulation&Analysis Center and other DHS programs. It describes the three primary resolutions at which analysis is conducted (microeconomic, mesoeconomic, and macroeconomic), the tools used at these three levels (from data analysis to internally developed and publicly available tools), and how they are used individually and in concert with each other and other infrastructure tools.

Analysis of High Plains Resource Risk and Economic Impacts

The importance of the High Plains Aquifer is broadly recognized as is its vulnerability to continued overuse. T his study e xplore s how continued depletions of the High Plains Aquifer might impact both critical infrastructure and the economy at the local, r egional , and national scale. This analysis is conducted at the county level over a broad geographic region within the states of Kansas and Nebraska. In total , 140 counties that overlie the High Plains Aquifer in these two states are analyzed. The analysis utilizes future climate projections to estimate crop production. Current water use and management practices are projected into the future to explore their related impact on the High Plains Aquifer , barring any changes in water management practices, regulat ion, or policy. Finally, the impact of declining water levels and even exhaustion of groundwater resources are projected for specific sectors of the economy as well as particular elements of the regions critical infrastructure.

Input-output model for MACCS nuclear accident impacts estimation¹

Since the original economic model for MACCS was developed, better quality economic data (as well as the tools to gather and process it) and better computational capabilities have become available. The update of the economic impacts component of the MACCS legacy model will provide improved estimates of business disruptions through the use of Input-Output based economic impact estimation. This paper presents an updated MACCS model, bases on Input-Output methodology, in which economic impacts are calculated using the Regional Economic Accounting analysis tool (REAcct) created at Sandia National Laboratories. This new GDP-based model allows quick and consistent estimation of gross domestic product (GDP) losses due to nuclear power plant accidents. This paper outlines the steps taken to combine the REAcct Input-Output-based model with the MACCS code, describes the GDP loss calculation, and discusses the parameters and modeling assumptions necessary for the estimation of long-term effects of nuclear power plant accidents.

Regional Economic Accounting (REAcct): A Software Tool for Rapidly Approximating Economic Impacts

This paper describes the Regional Economic Accounting (REAcct) analysis tool that has been in use for the last 5 years to rapidly estimate approximate economic impacts for disruptions due to natural or manmade events. It is based on and derived from the well-known and extensively documented input-output modeling technique initially presented by Leontief and more recently further developed by numerous contributors. REAcct provides county-level economic impact estimates in terms of gross domestic product (GDP) and employment for any area in the United States. The process for using REAcct incorporates geospatial computational tools and site-specific economic data, permitting the identification of geographic impact zones that allow differential magnitude and duration estimates to be specified for regions affected by a simulated or actual event. Using these data as input to REAcct, the number of employees for 39 directly affected economic sectors (including 37 industry production sectors and 2 government sectors) are calculated and aggregated to provide direct impact estimates. Indirect estimates are then calculated using Regional Input-Output Modeling System (RIMS II) multipliers. The interdependent relationships between critical infrastructures, industries, and markets are captured by the relationships embedded in the inputoutput modeling structure.

Estimates of the long-term U.S. economic impacts of global climate change-induced drought.

While climate-change models have done a reasonable job of forecasting changes in global climate conditions over the past decades, recent data indicate that actual climate change may be much more severe. To better understand some of the potential economic impacts of these severe climate changes, Sandia economists estimated the impacts to the U.S. economy of climate change-induced impacts to U.S. precipitation over the 2010 to 2050 time period. The economists developed an impact methodology that converts changes in precipitation and water availability to changes in economic activity, and conducted simulations of economic impacts using a large-scale macroeconomic model of the U.S. economy.

Executive Summary for Assessing the Near-Term Risk of Climate Uncertainty: Interdependencies among the U.S. States

Policy makers will most likely need to make decisions about climate policy before climate scientists have resolved all relevant uncertainties about the impacts of climate change. This study demonstrates a risk-assessment methodology for evaluating uncertain future climatic conditions. We estimate the impacts of climate change on U.S. state- and national-level economic activity from 2010 to 2050. To understand the implications of uncertainty on risk and to provide a near-term rationale for policy interventions to mitigate the course of climate change, we focus on precipitation, one of the most uncertain aspects of future climate change. We use results of the climate-model ensemble from the Intergovernmental Panel on Climate Changes (IPCC) Fourth Assessment Report 4 (AR4) as a proxy for representing climate uncertainty over the next 40 years, map the simulated weather from the climate models hydrologically to the county level to determine the physical consequences on economic activity at the state level, and perform a detailed 70-industry analysis of economic impacts among the interacting lower-48 states. We determine the industry-level contribution to the gross domestic product and employment impacts at the state level, as well as interstate population migration, effects on personal income, and consequences for the U.S. trade balance. We show that the mean or average risk of damage to the U.S. economy from climate change, at the national level, is on the order of