Economic Impacts of the Transportation Network Disruption: An Extension of SCGE Model

Abstract

This chapter presents a framework for assessing the economic impact of a disruption in transportation caused by catastrophic disasters, such as earthquakes. To develop integrated seismic risk management strategies, an organized seismic risk assessment should be conducted in consideration of all aspects of the disruption in transportation caused by an earthquake. To this end, it is necessary to establish an analytical framework for estimating the indirect economic losses (higher-order impacts) induced by a regional malfunctioning of transportation networks. This framework could relate the physical damages and affected transportation networks to the economic activity levels and analyze the effectiveness of the risk control measures. A spatial computable general equilibrium (SCGE) model is formulated, which is then integrated with a transportation model that can estimate the traffic volumes of freight and passenger traffic. As a case study, this model reviews the 2004 Niigata Chuetsu Earthquake. Considering the damages caused to the transportation infrastructure, the model indicates the extent of economic losses arising from the earthquake. These losses are distributed over regions as a consequence of the intra-and inter-regional trade in a regional economy.