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Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling

Author

Listed:
  • Lorenzo Carrera

    (Fondazione Eni Enrico Mattei, Ca’ Foscari University of Venice and Euro-Mediterranean Centre on Climate Change)

  • Gabriele Standardi

    (Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre on Climate Change)

  • Francesco Bosello

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Centre Climate Change and University of Milan)

  • Jaroslav Mysiak

    (Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre on Climate Change)

Abstract

In this paper we developed and tested an integrated methodology for assessing direct and indirect economic impacts of flooding. The methodology combines a spatial analysis of damage to physical stocks with a general economic equilibrium approach using a regionally-calibrated (to Italy) version of a Computable General Equilibrium (CGE) global model. We applied the model to the 2000 Po river flood. To account for the uncertainty in the induced effects on regional economies, we explored three disruption and two recovery scenarios. The results prove that: i) indirect losses are a significant share of direct losses, and ii) the model is able to capture both positive and negative economic effects of a disaster in different areas of the same country. The assessment of indirect impacts is essential for a full understanding of the economic outcomes of natural disasters.

Suggested Citation

  • Lorenzo Carrera & Gabriele Standardi & Francesco Bosello & Jaroslav Mysiak, 2014. "Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling," Working Papers 2014.82, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2014.82
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    Cited by:

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    2. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    3. 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.
    4. Standardi, Gabriele & Cai, Yiyong & Yeh, Sonia, 2017. "Sensitivity of modeling results to technological and regional details: The case of Italy's carbon mitigation policy," Energy Economics, Elsevier, vol. 63(C), pages 116-128.
    5. Barbora Šedová & Lucia Čizmaziová & Athene Cook, 2021. "A meta-analysis of climate migration literature," CEPA Discussion Papers 29, Center for Economic Policy Analysis.
    6. Hoffmann, Christin, 2019. "Estimating the benefits of adaptation to extreme climate events, focusing on nonmarket damages," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    7. Pedro Pinto Santos & Alexandre Oliveira Tavares & Paula Freire & Ana Rilo, 2018. "Estuarine flooding in urban areas: enhancing vulnerability assessment," 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. 93(1), pages 77-95, September.
    8. Hu, Xi & Pant, Raghav & Hall, Jim W. & Surminski, Swenja & Huang, Jiashun, 2019. "Multi-scale assessment of the economic impacts of flooding: evidence from firm to macro-level analysis in the Chinese manufacturing sector," LSE Research Online Documents on Economics 100534, London School of Economics and Political Science, LSE Library.
    9. Weijiang Li & Jiahong Wen & Bo Xu & Xiande Li & Shiqiang Du, 2018. "Integrated Assessment of Economic Losses in Manufacturing Industry in Shanghai Metropolitan Area Under an Extreme Storm Flood Scenario," Sustainability, MDPI, vol. 11(1), pages 1-19, December.
    10. Li, Wei & Jia, Zhijie & Zhang, Hongzhi, 2017. "The impact of electric vehicles and CCS in the context of emission trading scheme in China: A CGE-based analysis," Energy, Elsevier, vol. 119(C), pages 800-816.
    11. Xi Hu & Raghav Pant & Jim W. Hall & Swenja Surminski & Jiashun Huang, 2019. "Multi-Scale Assessment of the Economic Impacts of Flooding: Evidence from Firm to Macro-Level Analysis in the Chinese Manufacturing Sector," Sustainability, MDPI, vol. 11(7), pages 1-18, April.
    12. C. D. Pérez-Blanco & E. E. Koks & E. Calliari & J. Mysiak, 2018. "Economic Impacts of Irrigation-Constrained Agriculture in the Lower Po Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-38, January.
    13. Perez Blanco, C.D., 2018. "Waters run deep: A coupled Revealed Preference and CGE model to assess the economy-wide impacts of agricultural water buyback," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277028, International Association of Agricultural Economists.
    14. Luca Locatelli & Maria Guerrero & Beniamino Russo & Eduardo Martínez-Gomariz & David Sunyer & Montse Martínez, 2020. "Socio-Economic Assessment of Green Infrastructure for Climate Change Adaptation in the Context of Urban Drainage Planning," Sustainability, MDPI, vol. 12(9), pages 1-18, May.
    15. Mattia Amadio & Jaroslav Mysiak & Lorenzo Carrera & Elco Koks, 2016. "Improving flood damage assessment models in Italy," 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. 82(3), pages 2075-2088, July.
    16. Christin Hoffmann & Gunter Stephan, 2018. "Regional Flood Impacts And Adaptation In A Federal Setting: A Spatial Computable General Equilibrium Analysis For Switzerland," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(02), pages 1-36, May.
    17. Jan Oosterhaven & Johannes Többen, 2017. "Wider economic impacts of heavy flooding in Germany: a non-linear programming approach," Spatial Economic Analysis, Taylor & Francis Journals, vol. 12(4), pages 404-428, October.
    18. Santosh R. Joshi & Marc Vielle & Frédéric Babonneau & Neil R. Edwards & Philip B. Holden, 2016. "Physical and Economic Consequences of Sea-Level Rise: A Coupled GIS and CGE Analysis Under Uncertainties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 813-839, December.

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    More about this item

    Keywords

    Flood Risk; Indirect Impacts; Computable General Equilibrium; Natural Disasters;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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