The Regional Economic Impact of an Earthquake: Direct and Indirect Effects of Electricity Lifeline Disruptions

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Abstract

This paper develops a methodology to estimate the regional economic impacts of electricity lifeline disruptions caused by a catastrophic earthquake. The methodology is based on specially designed input-output and linear programming models. A simulation of a major earthquake in the New Madrid Seismic Zone near Memphis, Tennessee, indicates the potential production loss over the recovery period could amount to as much as 7 percent of gross regional product. Reallocation of scarce electricity across sectors could reduce the impacts substantially. Additionally, an improved restoration pattern of electricity transmission substations across subareas could reduce losses even more.

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