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 5: An attack on the airline system

JiYoung Park, Harry W. Richardson, Peter Gordon and James E. Moore II

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


Apart from major changes in the nation’s defense posture, we now know that the economic effects of the 9/11 terrorist attacks were relatively short-term in their impact (Park et al., 2009). This corroborates the idea that short-term impact studies of hypothetical attacks can be useful to policy makers allocating limited resources as they evaluate the benefits (costs avoided) of various defensive measures. Here we consider the short-term economic costs of an attack on the US commercial air system. Much is now known about the post-9/11 performance of the air travel industry: it took several years to recover. However, a full accounting of the economic costs has, to our knowledge, never been undertaken. Nevertheless, a careful analysis of the after-effects of the events of 9/11 is useful in estimating the economic impacts of another attack. We have a particular type of attack in mind, an attack using a shoulder-borne missile launcher to bring down a plane at close range near an airport soon after take-off or before landing. A surface-to-air missile such as the one that shot down the Malaysian airplane (MH17) on 17 July 2014 is much less likely to attack a plane within the United States although it might attack a US airliner at non-US locations. This can be protected against by installing and maintaining missile deflectors on all commercial aircraft to prevent missile attacks from MANPADS (Man-portable Air Defense Systems) or even RPGs (Rocket Propelled Grenades).

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