Factorial CGE‐Based Analysis for the Indirect Benefits of the Three Gorges Project

Abstract

Climate change has resulted in an increasing number of natural catastrophes during the last few decades, such as heatwaves (Z. Li et al., 2018), hurricanes (Weinkle et al., 2018), drought (Trenberth et al., 2014), and especially floods (Mallakpour & Villarini, 2015). Floods have been recognized as the most prevalent natural catastrophe, posing a hazard to the majority of locations worldwide. Floods accounted for 40% of all weather-related disasters, affecting over 1.65 billion people over the previous two decades, while the number of floods around the world has climbed from 1,389 to 3,254 (UN Office for Disaster Risk Reduction, 2020). Thus, although the construction of large-scale hydraulic projects (LHPs) not only is time-consuming but also requires numerous human and material resources, many LHPs have been built in both developed and developing countries to improve river basin flood-resilience and promote flood-risk management. Under such circumstances, it becomes critical to investigate the comprehensive effects of LHPs during and after floods, as well as to develop cost-effective postflood adaptation and mitigation strategies.It is preferable to have a solid understanding of how to estimate the flooding losses in order to be aware of LHPs' economic flood-retention impacts. Many recent studies have focused on the direct social and economic impacts of natural catastrophes (e.g., the loss of life and tangible possessions; Okuyama, 2014). Direct economic losses resulting from natural hazards were typically assessed by government authorities or insurance companies based on first-hand data surveys and interviews (Ansell & Valle, 2021), or disaster models. However, the direct losses during a flood event only account for a small portion of total losses, whereas indirect losses may impose a much longer and larger impact (Cunado & Ferreira, 2014;Okuyama & Santos, 2014). Some approaches have been developed to analyze such indirect losses. Zeng et al. (2019) distinguished the main approaches for estimating the indirect flood losses of a natural disaster, such as postdisaster economic surveying (Molinari et al., 2014), econometric modeling (Cavallo et al., 2013, input-output (IO) models (Miller & Blair, 2009), and computable general equilibrium (CGE) models (Rose & Liao, 2005). Since the first two methods inevitably require primary data sources and can hardly capture the complex interrelationships in the socioeconomic system, academics preferred the IO and CGE models for investigating indirect flood losses (Koks & Thissen, 2016). However, the IO approach