IDEAS home Printed from https://ideas.repec.org/a/spr/nathaz/v58y2011i1p163-182.html
   My bibliography  Save this article

Modeling a major source of economic resilience to disasters: recapturing lost production

Author

Listed:
  • JiYoung Park
  • Joongkoo Cho
  • Adam Rose

Abstract

Terrorist attacks and natural disasters have potentially severe economic consequences in terms of property damage and business interruption. However, experience from the September 11 World Trade Center attack and other disasters indicates that the economy has a great deal of resilience. This refers to the ability to dampen the maximum potential economic output (business interruption) loss. One of the most prominent sources of resilience is the ability of businesses to reschedule, or recapture, lost production after the event. Although there have been applications of a fixed parameter recapture factor for each of several aggregated sectors of the economy, there has been little formal analysis of this resilience action. This study offers a theoretic framework for analyzing production rescheduling. It distinguishes the major conditions influencing two aspects that have previously been neglected: (1) the maximum time span over which the rescheduling can take place and (2) the likely decline of the maximum recapture as the business interruption increases. We divide the relevant time path into two periods after recovery. One is a function of a recaptured output path after recovery to the status of normal production. The other is a function for the maximum recaptured production, based on the recaptured output path. The recaptured output path function is assumed to follow a normal distribution function, and hence, total recaptured output follows the cumulative normal distribution function over time after productive capacity is restored. Also, we develop a new cumulative normal distribution function for interruption time duration, which is symmetric with respect to the output axis. This recapture function has unknown parameters. Empirical data on the recaptured amounts following an actual disaster can be used to estimate the parameters of this function using simulation methods. Copyright Springer Science+Business Media B.V. 2011

Suggested Citation

  • JiYoung Park & Joongkoo Cho & Adam Rose, 2011. "Modeling a major source of economic resilience to disasters: recapturing lost production," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 58(1), pages 163-182, July.
    • Handle: RePEc:spr:nathaz:v:58:y:2011:i:1:p:163-182
    DOI: 10.1007/s11069-010-9656-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11069-010-9656-9
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11069-010-9656-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rose Adam Z. & Oladosu Gbadebo & Lee Bumsoo & Asay Garrett Beeler, 2009. "The Economic Impacts of the September 11 Terrorist Attacks: A Computable General Equilibrium Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 15(2), pages 1-31, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saurabh Prabhu & Mohammad Javanbarg & Marc Lehmann & Sez Atamturktur, 2019. "Multi-peril risk assessment for business downtime of industrial facilities," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 97(3), pages 1327-1356, July.
    2. Adam Rose, 2022. "Behavioral Economic Consequences of Disasters: A Basis for Inclusion in Benefit–Cost Analysis," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 213-233, July.
    3. Dormady, Noah C. & Rose, Adam & Roa-Henriquez, Alfredo & Morin, C. Blain, 2022. "The cost-effectiveness of economic resilience," International Journal of Production Economics, Elsevier, vol. 244(C).
    4. Vicki Marion Bier, 2017. "Understanding and Mitigating the Impacts of Massive Relocations Due to Disasters," Economics of Disasters and Climate Change, Springer, vol. 1(2), pages 179-202, July.
    5. Hyun Kim & David Marcouiller, 2015. "Considering disaster vulnerability and resiliency: the case of hurricane effects on tourism-based economies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 945-971, May.
    6. Ying Wang & Hao Chen & Juan Li, 2012. "Factors affecting earthquake recovery: the Yao’an earthquake of China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 64(1), pages 37-53, October.
    7. Yingqi Zhu & Ying Wang & Tianxue Liu & Qi Sui, 2018. "Assessing macroeconomic recovery after a natural hazard based on ARIMA—a case study of the 2008 Wenchuan earthquake in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 91(3), pages 1025-1038, April.
    8. Noah C. Dormady & Robert T. Greenbaum & Kim A. Young, 2021. "An experimental investigation of resilience decision making in repeated disasters," Environment Systems and Decisions, Springer, vol. 41(4), pages 556-576, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron B. Gertz & James B. Davies & Samantha L. Black, 2019. "A CGE Framework for Modeling the Economics of Flooding and Recovery in a Major Urban Area," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1314-1341, June.
    2. J. Nassios & J.A. Giesecke, 2015. "The Macroeconomic and Sectoral Effects of Terrorism in the U.S.: A Reconciliation of CGE and Econometric Approaches," Centre of Policy Studies/IMPACT Centre Working Papers g-256, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. J. A. Giesecke & W. J. Burns & A. Barrett & E. Bayrak & A. Rose & P. Slovic & M. Suher, 2012. "Assessment of the Regional Economic Impacts of Catastrophic Events: CGE Analysis of Resource Loss and Behavioral Effects of an RDD Attack Scenario," Risk Analysis, John Wiley & Sons, vol. 32(4), pages 583-600, April.
    4. Adam Rose & Misak Avetisyan & Samrat Chatterjee, 2014. "A Framework for Analyzing the Economic Tradeoffs Between Urban Commerce and Security Against Terrorism," Risk Analysis, John Wiley & Sons, vol. 34(8), pages 1554-1579, August.
    5. Zio, Enrico, 2016. "Challenges in the vulnerability and risk analysis of critical infrastructures," Reliability Engineering and System Safety, Elsevier, vol. 152(C), pages 137-150.
    6. Adam Rose & Tyler Kustra, 2013. "Economic Considerations in Designing Emergency Management Institutions and Policies for Transboundary Disasters," Public Management Review, Taylor & Francis Journals, vol. 15(3), pages 446-462, March.
    7. Tobias Mueller & Steven Gronau, 2023. "Fostering Macroeconomic Research on Hydrogen-Powered Aviation: A Systematic Literature Review on General Equilibrium Models," Energies, MDPI, vol. 16(3), pages 1-33, February.
    8. Rose Adam Z. & Blomberg S. Brock, 2010. "Total Economic Consequences of Terrorist Attacks: Insights from 9/11," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(1), pages 1-14, June.
    9. Samrat Chatterjee & Stephen C. Hora & Heather Rosoff, 2015. "Portfolio Analysis of Layered Security Measures," Risk Analysis, John Wiley & Sons, vol. 35(3), pages 459-475, March.
    10. Omar, Ayman M.A. & Lambe, Brendan J & Wisniewski, Tomasz Piotr, 2021. "Perceptions of the threat to national security and the stock market," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 504-522.
    11. Yan Shi & Shumiao Jin & Klaus Seeland, 2015. "Modeling business interruption impacts due to disrupted highway network of Shifang by the Wenchuan earthquake," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 75(2), pages 1731-1745, January.
    12. Adam Rose & Misak Avetisyan & Heather Rosoff & William J. Burns & Paul Slovic & Oswin Chan, 2017. "The Role of Behavioral Responses in the Total Economic Consequences of Terrorist Attacks on U.S. Air Travel Targets," Risk Analysis, John Wiley & Sons, vol. 37(7), pages 1403-1418, July.
    13. Bashar, Omar & Mallick, Debdulal, 2021. "Frequency of Shocks, Resilience and Shock Persistence: Evidence from Natural Disasters," MPRA Paper 107517, University Library of Munich, Germany.
    14. Chen, Zhenhua & Rose, Adam Z. & Prager, Fynnwin & Chatterjee, Samrat, 2017. "Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 207-226.
    15. Jason Nassios & James A. Giesecke, 2018. "Informing Ex Ante Event Studies with Macro‐Econometric Evidence on the Structural and Policy Impacts of Terrorism," Risk Analysis, John Wiley & Sons, vol. 38(4), pages 804-825, April.
    16. Adam Rose, 2022. "Behavioral Economic Consequences of Disasters: A Basis for Inclusion in Benefit–Cost Analysis," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 213-233, July.
    17. Dormady, Noah & Roa-Henriquez, Alfredo & Rose, Adam, 2019. "Economic resilience of the firm: A production theory approach," International Journal of Production Economics, Elsevier, vol. 208(C), pages 446-460.
    18. Rose, Adam & Wei, Dan & Paul, Donald, 2018. "Economic consequences of and resilience to a disruption of petroleum trade: The role of seaports in U.S. energy security," Energy Policy, Elsevier, vol. 115(C), pages 584-615.
    19. Fynnwin Prager & Dan Wei & Adam Rose, 2017. "Total Economic Consequences of an Influenza Outbreak in the United States," Risk Analysis, John Wiley & Sons, vol. 37(1), pages 4-19, January.
    20. Vicki Marion Bier, 2017. "Understanding and Mitigating the Impacts of Massive Relocations Due to Disasters," Economics of Disasters and Climate Change, Springer, vol. 1(2), pages 179-202, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:nathaz:v:58:y:2011:i:1:p:163-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.