National Economic Impact Analysis of Terrorist Attacks and Natural Disasters

National Economic Impact Analysis of Terrorist Attacks and Natural Disasters

Edited by Harry W. Richardson, Jiyoung Park, James E. Moore II and Qisheng Pan

This book develops a national economic impact model to estimate the effects of simulated terrorist attacks and natural disasters on individual US States and economic sectors. The model, called NIEMO (The National Interstate Economic Model) looks at interindustry relationships and interregional trade. It is highly disaggregated making the model very accurate. The authors examine potential attack targets including theme parks, sporting events, bridges and tunnels in the national highway system as well as attempts to shoot down airplanes or spread foot-and-mouth disease. Covered natural disasters are almost all real world: Hurricane Katrina, the Joplin Tornado, the Gulf Oil Spill and Hurricane Sandy. The effects on State economies caused by the closing international borders in response to a global pandemic is also examined.

Chapter 3: Bridge and tunnel closures (TransNIEMO)

JiYoung Park, Harry W. Richardson, Peter Gordon, James E. Moore II, Qisheng Pan and Joongkoo Cho

Subjects: economics and finance, methodology of economics, environment, disasters, politics and public policy, political economy, terrorism and security

Extract

In this chapter, we present an application of TransNIEMO, a model developed to address the neglect of infrastructure in Multiregional Input-Output (MRIO) models. This builds on the National Interstate Economic Model (NIEMO) that features in other chapters. TransNIEMO adds the nation’s highway network to accommodate intra- and interindustry trade. This new model achieves consistent highway network and economic equilibria. The US economy is vulnerable to terrorist attacks, and modelling how disruptions at major choke points on the nation’s highways might impact the US economy on a state-by-state and industry-by-industry basis is a topic of particular interest. In our view, TransNIEMO is the only operational model that can be used for this type of analysis. While this chapter focuses on simulated attacks on three major choke points, disruptions from natural or man-made events on any other vulnerable highway link can easily be modeled. Perhaps surprisingly, as a proportion of the nation’s total output, the losses experienced in the three scenarios are relatively small. This reflects high levels of redundancy in the highway network. However, there are significant differences in both state-by-state and industry-by-industry impacts, and highway infrastructure (especially bridges and tunnels) are vulnerable to disruption or structural failure from neglect, natural or man-made disasters and the possibility of terrorist attacks, a major national concern.

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