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Sequencing Lifeline Repairs After an Earthquake: An Economic Approach

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Abstract

Recoveries after recent earthquakes in the U.S. and Japan have shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts. We apply tools from the mechanisms design literature to show ways to integrate economic incentives into the management of natural disasters and discuss issues related to the application to seismic event recovery. The focus is on restoring lifeline services such as the water, gas, transportation, and electric power networks. We put forward decisional procedures that an uninformed planner could employ to set repair priorities and help to coordinate lifeline firms in the post-earthquake reconstruction.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 587.03.

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Length: 23
Date of creation: 25 Jun 2004
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Handle: RePEc:aub:autbar:587.03

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Keywords: utilities; inter-temporal decisions; natural disasters; mechanism design; network externalities;

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  1. Matthew 0. Jackson, 1989. "Implementation in Undominated Strategies - A Look at Bounded Mechanisms," Discussion Papers 833, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Thomas A. Garrett & Russell S. Sobel, 2002. "The political economy of FEMA disaster payments," Working Papers 2002-012, Federal Reserve Bank of St. Louis.
  3. Jack Hirshleifer, 1991. "Disaster and Recovery," UCLA Economics Working Papers 639, UCLA Department of Economics.
  4. Jackson, Matthew O., 1999. "A Crash Course in Implementation Theory," Working Papers 1076, California Institute of Technology, Division of the Humanities and Social Sciences.
  5. Kunreuther, Howard & Kleffner, Anne E, 1992. "Should Earthquake Mitigation Measures Be Voluntary or Required?," Journal of Regulatory Economics, Springer, vol. 4(4), pages 321-33, December.
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Cited by:
  1. Timothy Matisziw & Alan Murray & Tony Grubesic, 2010. "Strategic Network Restoration," Networks and Spatial Economics, Springer, vol. 10(3), pages 345-361, September.

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