Wider economic impacts of heavy flooding in Germany: a non-linear programming approach

Abstract

Wider economic impacts of heavy flooding in Germany: a non-linear programming approach. Spatial Economic Analysis. This paper further develops a new methodology to estimate the wider, indirect impacts of major disasters, and applies it to the 2013 heavy flooding of southern and eastern Germany. We model the attempts of economic actors to continue their usual activities, as closely as possible, by minimizing the information gain between the pre-and post-disaster pattern of economic transactions of the economy at hand. Findings show that government support of local final demand substantially reduces the indirect losses of the floods, while having a disaster at the top of the business cycle increases them. Moreover, we find that assuming fixed trade origin shares and fixed industry market shares, as in all multiregional inputoutput models, leads to implausibly large estimates of the indirect losses. aux graves inondations survenues en Allemagne méridionale et orientale, en 2013. Nous modélisons les tentatives, par des acteurs économiques, de poursuivre, le plus possible, leurs activités normales en minimisant les gains d'informations du modèle de transactions économiques de l'économie présente entre la période précédent la catastrophe et celle qui lui fait suite. Les résultats montrent que l'assistance du gouvernement à la demande finale locale réduit dans une grande mesure les pertes indirectes dues aux inondations, alors qu'en plaçant une catastrophe en haut du cycle des affaires, on les augmente. Nous notons également que l'hypothèse de parts fixes de l'origine des échanges et de parts fixes du secteur industriel, comme dans tous les modèles d'entrée / sortie plurirégionaux, donne lieu à des estimations anormalement élevées des pertes indirectes. KEYWORDS MOTS CLÉSanalyse des désastres; commerce inter-régional; tableau offre -utilisation plurirégional; gains d'informations RESUMEN Repercusiones económicas más amplias por las fuertes inundaciones en Alemania: un enfoque de programación no lineal. Spatial Economic Analysis. En este artículo seguimos desarrollando una nueva metodología para calcular las repercusiones amplias e indirectas de desastres importantes que ponemos en práctica con la fuerte inundación de 2013 del sur y el este de Alemania. Modelamos, lo más cerca posible, los intentos de los actores económicos de continuar sus actividades habituales, por lo que minimizamos la ganancia de información entre el patrón antes y después de la catástrofe de las transacciones económicas de la economía a mano. Los resultados muestran que el apoyo gubernamental a la demanda final de ámbito local reduce considerablemente las pérdidas indirectas causadas por las inundaciones, mientras que sufrir una catástrofe en la cima del ciclo comercial las aumenta. Además, observamos que si suponemos cuotas fijas de origen comercial y cuotas fijas de mercado de la industria, al igual que en todos los modelos de entradas y salidas multirregionales, llegamos a estimaciones absurdamente grandes de las pérdidas indirectas. PA...

The macroeconomic impacts of future river flooding in Europe

“…Our results show that some of the negative impacts can be offset by market adjustments through trade and substitution, resulting in lower indirect impacts compared to the direct impacts from asset damages. Multiple studies, applying different modeling frameworks capable of accounting for (some) flexibility in the economy, show similar results (Bosello et al 2012, Carrera et al 2015, Oosterhaven and Tobben 2017, Willner et al 2018. Bosello et al (2012), for instance, shows that countries which are not directly affected can have small benefits; a relative flexible market can 'smooth' an initial negative shock (Bosello et al 2012).…”

“…To validate the outcomes, we can compare the results and model behavior with similar academic exercises (Bosello et al 2012, Carrera et al 2015, Oosterhaven and Tobben 2017, Chen et al 2018, Willner et al 2018, but more research in this area is required. Our results show that some of the negative impacts can be offset by market adjustments through trade and substitution, resulting in lower indirect impacts compared to the direct impacts from asset damages.…”

Reconstruction of Demand Shocks in Input-Output Networks

“…We note that a successful reconstruction of ∆f also allows to reconstruct the missing information about the production changes via the relation ∆x = L ∆f . Hence, a reconstruction yields both the origin and the impacts of shocks, which is of great importance to design policies to enhance the resilience of economic networks [4,8,9].…”

“…Natural and man-made disasters, for example storms, floods or terrorist attacks, cause shocks to both the demand and supply sides in certain sectors or regions. In many cases, it is only possible to measure the impacts of a disaster on a few sectors directly, but knowing the indirect impacts on other sectors is of great importance for designing policies that aim at enhancing the economy's resilience [4,8,9]. Hence, the application of powerful techniques for data analysis and reconstruction is central in IO analysis.…”

Return of the capital coefficients matrix

“…Steenge and Bočkarjova (2007) put forward an IO-based model that targets the quickest possible recovery and restoration paths to the pre-disaster production level. In a related research line, Li et al (2013) considered adjustment mechanisms to specifically focus on allocation and distribution problems, while recent contributions have added non-linear programming approaches (Oosterhaven and Többen, 2017). 1 However, despite these developments, one particular aspect of modern disaster analysis has not been given sufficient attention.…”