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 10: The Gulf oil spill (FlexNIEMO)

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

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


Disasters, whether natural or man-made, often prompt responses that include compensation to victims. This can involve insurance companies, federal, state or local governments or industrial groups that share some of the culpability. All such compensation programs face the complex task of coming up with reasonable procedures to estimate the incidence of the losses. In recent years, the September 11th Victim Compensation Fund was created by the US Congress via the Air Transportation Safety and System Stabilization Act. This was enacted shortly after the attacks to compensate victims or their families in exchange for their agreement not to take legal action against any of the airlines involved. Kenneth Feinberg was appointed to develop and administer the regulations and procedures governing the processing of claims. Feinberg was tasked with deciding and justifying how much compensation each family of a 9/11 victim could receive. His approach was to guestimate how much each victim would have earned in a full lifetime. If a family accepted his offer, it surrendered the right to appeal.

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