A disaster footprint framework for assessing the cascading indirect economic impacts of natural disasters

Xia, Yang (2017) A disaster footprint framework for assessing the cascading indirect economic impacts of natural disasters. Doctoral thesis, University of East Anglia.

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Abstract

This PhD thesis employs and further develops models from environmental, epidemiological and macroeconomic studies to construct an interdisciplinary ‘Disaster Footprint Model’ based on input-output techniques for assessing the cascading indirect economic loss resulting from both ‘rapid-onset’ and ‘persistent’ natural disasters that were happened in the UK or China at different points in time.
Each natural disaster will undermine physical capital and inhabitants differently in the form of destructions to infrastructures, roads, buildings, death or injuries, which are normally termed as ‘direct impacts’ of a disaster. Unfortunately, the tragedy is not over. Direct impacts of a disaster will disrupt the economic activity when machineries are out of order and labourers cannot attend the work, which will further trigger the economic output of the affected industries or regions due to the shrinking capital and labour productivity. Indeed, the initial reduction in output level of the affected industry or region can spill over those unaffected industries and regions through industrial and regional interconnectedness in the sense that each industry/region sells its outputs to or purchases commodities from other industries/regions. As a result, indirect economic loss can constitute a considerable share in total economic loss of a natural disaster. The significant role of indirect economic loss has been well documented given that the industrial and regional interdependencies have become unprecedentedly tightened under globalization in the contemporary world. In this respect, input-output model is a good candidate to cope with the cascading indirect economic loss from a disaster due to its root in ‘a circular economy’. An input-output model was developed by Wassily Leontief based on the concept of ‘a circular economy’, suggesting that social production and reproduction activities enclose the use of high-efficiency resources and environmentally friendly. Specifically, the production of the labourers will be used in the process of nature cycle while the natural resources will be used in the perpetual cycle (Liu et al, 2016). Labourers simultaneously act as consumers and economic
production will be partially consumed by consumers and partially by other industries. In this respect, an input-output model takes the form of matrix and records the inter-industrial transaction flows. For ‘rapid-onset’ disasters that arrive rapidly with few days or without warnings, despite that a number of hybrid input-output based models have been proposed, they have heavily relied on accurate estimation of physical capital damages without conscientiously considering the distinctive characteristics of these disasters where their models might become invalidated. For ‘persistent’ disasters that persist longer and whose effects will be gradually realized over time, their ‘invisible’ health impacts provoke challenges for existing disaster risk modelling and little attention has been attached to constrained labour productivity in a post-disaster economy. Meanwhile, existing assessment tools in health costs studies mainly stem from a patient’s standpoint and quantify the disease burden at a microeconomic level, thus uncovering the need for investigating the macroeconomic implications from these health impacts. Environmental, health and economic problems are intertwining with one another in an environment-health-economy nexus. Any single phenomenon is resulting from a complexity of multi-factors and thus, should be solved by integrating these studies instead of keeping them as separate entities.
Inspired by this, Chapter 4 designs an interdisciplinary methodological framework that bridges environmental or meteorological studies, epidemiological studies and macroeconomic analysis. The framework allows several input-output based options to consider the distinctive feathers of a natural disasters where the traditional disaster modelling cannot function well, to understand and incorporate the health impacts through an angel of reducing labour availability and productive time, and to capture the cascading indirect economic loss triggered by industrial and regional interdependencies from a macroeconomic perspective. To verify the feasibility and applicability of the approach, Chapter 5, 6 and 7 select four case studies that include the economic assessments of a typical flood with special characteristics occurred in
the UK; one on China’s air pollution in 2012; and two on China’s heat waves in Nanjing and Shanghai in 2013 and 2007, respectively.
After applying the approach on four cases covering both ‘rapid-onset’ and ‘persistent’ natural disasters, the thesis illumes future research with several important conclusions that 1) Disaster risk studies should attach equal significance to loss in capital productivity and labour productivity; 2) Air pollution and heat waves should be considered analogously as a natural disaster that affects human capital more than physical capital and thus, they should be investigated more deeply in disaster risk studies; 3) Disaster risk modelling should be conducted with additional attention on disaster characteristics; 4) Existing approaches used in health cost assessments generally take the patient’s perspective in evaluating the economic burden of a particular disease, which is insufficient for investigations of the macroeconomic implications on the entire economic system because industrial interdependencies and indirect economic losses are extremely important for such macroeconomic evaluations; 5) Input-output techniques and its modified forms are able to provide more modelling options for disaster risk assessment and management; 6) The developed interdisciplinary approach can successfully bridge environmental or meteorological studies, epidemiological studies and macroeconomic analysis. It also allows to consider the distinctive feathers of a natural disasters, to understand and incorporate the health impacts through an angel of reducing labour availability and productive time, and to capture the cascading indirect economic loss triggered by industrial and regional interdependencies; 7) The estimation based on such interdisciplinary model can be more accurate and effective once more comprehensive and sophisticated dataset are available, such as the occupational disease incidence rate and required time for each outpatient visit.

Item Type: Thesis (Doctoral)
Faculty \ School: Faculty of Social Sciences > School of International Development
Depositing User: Jackie Webb
Date Deposited: 03 May 2018 14:13
Last Modified: 03 May 2018 14:13
URI: https://ueaeprints.uea.ac.uk/id/eprint/66939
DOI:

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