Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach

Stephane Hallegatte and Fanny Henriet

No 2008.100, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This article proposes a framework to investigate the consequences of natural disasters. This framework is based on the disaggregation of Input-Output tables at the business level, through the representation of the regional economy as a network of production units. This framework accounts for (i) limits in business production capacity; (ii) forward propagations through input shortages; and (iii) backward propagations through decreases in demand. Adaptive behaviors are included, with the possibility for businesses to replace failed suppliers, entailing changes in the network structure. This framework suggests that disaster costs depend on the heterogeneity of losses and on the structure of the affected economic network. The model reproduces economic collapse, suggesting that it may help understand the difference between limited-consequence disasters and disasters leading to systemic failure.

Keywords: Natural disasters; Economic impacts; Economic Network (search for similar items in EconPapers)
JEL-codes: D20 Q54 R15 (search for similar items in EconPapers)
Date: 2008-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2008.100

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