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Modeling Imbalanced Economic Recovery Following a Natural Disaster Using Input-Output Analysis

Authors

  • Jun Li,

    Corresponding author
    • Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research (4CMR), University of Cambridge, Cambridge, UK
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  • Douglas Crawford-Brown,

    1. Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research (4CMR), University of Cambridge, Cambridge, UK
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  • Mark Syddall,

    1. Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research (4CMR), University of Cambridge, Cambridge, UK
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  • Dabo Guan

    1. School of Earth and Environment, University of Leeds, Leeds, UK
    2. Institute of Applied Ecology, Chinese Academy of Sciences, Shenyang, China
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Address correspondence to Jun Li, Gray Institute for Radiation Oncology & Biology, Department of Oncology, University of Oxford, Old Road Campus Research Building, Off Roosevelt Drive, Oxford, OX3 7DQ, UK; jun.li@oncology.ox.ac.uk.

Abstract

Input-output analysis is frequently used in studies of large-scale weather-related (e.g., Hurricanes and flooding) disruption of a regional economy. The economy after a sudden catastrophe shows a multitude of imbalances with respect to demand and production and may take months or years to recover. However, there is no consensus about how the economy recovers. This article presents a theoretical route map for imbalanced economic recovery called dynamic inequalities. Subsequently, it is applied to a hypothetical postdisaster economic scenario of flooding in London around the year 2020 to assess the influence of future shocks to a regional economy and suggest adaptation measures. Economic projections are produced by a macro econometric model and used as baseline conditions. The results suggest that London's economy would recover over approximately 70 months by applying a proportional rationing scheme under the assumption of initial 50% labor loss (with full recovery in six months), 40% initial loss to service sectors, and 10–30% initial loss to other sectors. The results also suggest that imbalance will be the norm during the postdisaster period of economic recovery even though balance may occur temporarily. Model sensitivity analysis suggests that a proportional rationing scheme may be an effective strategy to apply during postdisaster economic reconstruction, and that policies in transportation recovery and in health care are essential for effective postdisaster economic recovery.

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