Modeling the Role of Inventories and Heterogeneity in the Assessment of the Economic Costs of Natural Disasters

Stephane Hallegatte

Post-Print from HAL

Abstract: Estimates of the cost of potential disasters, including indirect economic consequences, are an important input in the design of risk management strategies. The adaptive regional input-output (ARIO) inventory model is a tool to assess indirect disaster losses and to analyze their drivers. It is based on an input-output structure, but it also (i) explicitly represents production bottlenecks and input scarcity and (ii) introduces inventories as an additional flexibility in the production system. This modeling strategy distinguishes between (i) essential supplies that cannot be stocked (e.g., electricity, water) and whose scarcity can paralyze all economic activity; (ii) essential supplies that can be stocked at least temporarily (e.g., steel, chemicals), whose scarcity creates problems only over the medium term; and (iii) supplies that are not essential in the production process, whose scarcity is problematic only over the long run and are therefore easy to replace with imports. The model is applied to the landfall of Hurricane Katrina in Louisiana and identifies two periods in the disaster aftermath: (1) the first year, during which production bottlenecks are responsible for large output losses; (2) the rest of the reconstruction period, during which bottlenecks are inexistent and output losses lower. This analysis also suggests important research questions and policy options to mitigate disaster-related output losses.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (46)

Published in Risk Analysis, 2014, 34 (1), pp.152-167. ⟨10.1111/risa.12090⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Modeling the Role of Inventories and Heterogeneity in the Assessment of the Economic Costs of Natural Disasters (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01239785

DOI: 10.1111/risa.12090

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().