Modeling business interruption impacts due to disrupted highway network of Shifang by the Wenchuan earthquake

Yan Shi (), Shumiao Jin and Klaus Seeland

Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, 2015, vol. 75, issue 2, 1745 pages

Abstract: A highway network plays an important role in sustaining business operations in a regional economy. However, in the event of catastrophic earthquakes, a highway network is very vulnerable to suffering physical damage as a result of the violent ground shaking. The failure of the highway network leads directly to business interruption impacts on the highway transportation sector, which subsequently sets off a ripple effect on other sectors due to economic interdependency. This article was aimed to estimate the business interruption impact on Shifang’s economic system triggered by the disrupted highway network resulting from the Wenchuan earthquake. A regional computable general equilibrium model is applied to simulate the business interruption impact. Moreover, a specific aspect of economic resilience has been incorporated into the model to explore its contribution toward reducing business interruption losses. The study results indicate that business interruption losses without a resilience factor total approximately CNY 1.08 billion, 47.37 % of the direct economic losses attributed to Shifang’s disrupted highway network as a result of the Wenchuan earthquake. When economic resilience is included in the model, the potential business interruption losses are reduced by 88 % through restraint of the negative aspects of business interruption impacts. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Earthquake; Business interruption losses; Computable general equilibrium model; Highway network; Economic resilience (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11069-014-1391-1

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