Integrated Assessment of Economic Losses in Manufacturing Industry in Shanghai Metropolitan Area Under an Extreme Storm Flood Scenario

Weijiang Li, Jiahong Wen, Bo Xu, Xiande Li and Shiqiang Du
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Weijiang Li: School of Environmental and Geographical Sciences, Shanghai Normal University, Shanghai 200234, China
Jiahong Wen: School of Environmental and Geographical Sciences, Shanghai Normal University, Shanghai 200234, China
Bo Xu: Department of Geography and Environmental Studies, California State University San Bernardino, San Bernardino, CA 92407, USA
Xiande Li: School of Environmental and Geographical Sciences, Shanghai Normal University, Shanghai 200234, China
Shiqiang Du: School of Environmental and Geographical Sciences, Shanghai Normal University, Shanghai 200234, China

Sustainability, 2018, vol. 11, issue 1, 1-19

Abstract: In this paper, we developed an integrated methodology for assessing asset damage, production capacity loss, and inter-sector ripple loss using the depth-damage curve, Cobb-Douglas production function and Input-Output model. We applied this methodology to the detailed individual manufacturing firms in Shanghai under an extreme storm floods scenario to simulate the disaster impact propagation from local individual firms to the entire industrial system and comprehensively estimate the resulting economic losses and their spatial distribution. Our results show that given no floodwall protection, a 1000-year storm flood scenario would cause direct asset damage of US $21 billion to the Shanghai manufacturing industry, including fixed asset damage of US $12 billion and inventory damage of US $9 billion. Due to the shortage of input productive factors of asset and labor, it would further lead to production capacity loss of US $24 billion. In addition, affected manufacturing industry would indirectly result in ripple loss of US $60 billion among dependent sectors, which has a significant amplifier effect. Our results have important implications for reasonable cost-benefit analysis of structural flood control measures in coastal areas, as well as for manufacturing firm location planning and resilience strategy decision-making.

Keywords: Shanghai; storm flooding; manufacturing industry; asset damage; production capacity loss; ripple loss (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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