Simulation of supply chain disruptions considering establishments and power outages

In this paper, we simulate the economic loss resulting from supply chain disruptions triggered by the Great East Japan Earthquake (GEJE) in 2011, applying data from firm-level supply chains and establishment-level attributes to an agent-based model. To enhance the accuracy of the simulation, we extend data and models in previous studies in four ways. First, we identify the damage to production facilities in the disaster-hit regions more accurately by using establishment-level census and survey data and geographic information system (GIS) data on the damages caused by the GEJE and subsequent tsunami. Second, the use of establishment-level data enables us to capture supply chains between non-headquarter establishments in disaster-hit regions and establishments in other regions. Third, we incorporate the effect of power outages after the GEJE on production reduction, which exacerbated the effect of the supply chain disruption, particularly in the weeks immediately after the GEJE. Finally, our model incorporates sectoral heterogeneity by employing sector-specific parameters. Our findings indicate that the extended method can significantly improve the accuracy of predicting the domestic production after the GEJE, particularly due to the first three improvements utilizing various data sources, not because of the use of more sector-specific parameters. Our method can be applied to predict the economic effect of future disasters, such as the Nankai Trough earthquake, on each region more precisely.