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 9: The economic impacts of Hurricanes Katrina and Rita on the oil and port sectors

JiYoung Park, Harry W. Richardson, Qisheng Pan, 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

Extract

Input-output models have been applied to the problem of economic impact estimation for many years. In recent years, our group has developed and applied IO models that include substantial spatial disaggregation. Most decision makers are interested in local effects and our models can estimate these. The Southern California Planning Model (SCPM) applies to the greater Los Angeles area and is used to estimate impacts for a large number of traffic analysis zones (TAZs). The recently developed National Interstate Economic Model (NIEMO) is a multiregional IO model for the 50 states and the District of Columbia. Both models provide results for 47 industrial sectors (labeled USC Sectors). NIEMO has a supply-side as well as a demand-side capability. In applications to hypothetical or actual port closures, for example, the loss of exports is best modeled via the demand-side NIEMO whereas the loss of imports is modeled via the supply-side NIEMO.

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