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Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach

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  • Henriet, Fanny
  • Hallegatte, Stephane

Abstract

This article proposes a framework to investigate the consequences of natural disasters. This framework is based on the disaggregation of Input-Output tables at the business level, through the representation of the regional economy as a network of production units. This framework accounts for (i) limits in business production capacity; (ii) forward propagations through input shortages; and (iii) backward propagations through decreases in demand. Adaptive behaviors are included, with the possibility for businesses to replace failed suppliers, entailing changes in the network structure. This framework suggests that disaster costs depend on the heterogeneity of losses and on the structure of the affected economic network. The model reproduces economic collapse, suggesting that it may help understand the difference between limited-consequence disasters and disasters leading to systemic failure.

Suggested Citation

  • Henriet, Fanny & Hallegatte, Stephane, 2008. "Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach," Coalition Theory Network Working Papers 46657, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemct:46657
    DOI: 10.22004/ag.econ.46657
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    Cited by:

    1. B. Coluzzi & M. Ghil & S. Hallegatte & G. Weisbuch, 2010. "Boolean delay equations on networks: An application to economic damage propagation," Papers 1003.0793, arXiv.org.
    2. Stéphane Hallegatte & Fanny Henriet & Jan Corfee-Morlot, 2011. "The economics of climate change impacts and policy benefits at city scale: a conceptual framework," Climatic Change, Springer, vol. 104(1), pages 51-87, January.
    3. Stéphane Hallegatte, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Post-Print hal-00802050, HAL.
    4. Wenzel, Lars & Wolf, André, 2013. "Protection against major catastrophes: An economic perspective," HWWI Research Papers 137, Hamburg Institute of International Economics (HWWI).
    5. Nina Graveline & Marine Gremont, 2017. "Measuring and understanding the microeconomic resilience of businesses to lifeline service interruptions due to natural disasters," Post-Print hal-01631780, HAL.
    6. Hiroyasu Inoue, 2021. "Propagation of International Supply-Chain Disruptions between Firms in a Country," JRFM, MDPI, vol. 14(10), pages 1-14, October.

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    More about this item

    Keywords

    Production Economics;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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