Assessing the Macroeconomic Impacts of Disasters: an Updated Multi-Regional Impact Assessment (MRIA) model

TL;DR

This paper introduces an advanced Multi-Regional Impact Assessment (MRIA) model to evaluate the macroeconomic effects of disasters, emphasizing regional trade dynamics, logistical constraints, and sectoral criticality for better disaster impact mitigation.

Contribution

The study develops a novel MRIA model that incorporates regional trade and logistical constraints, along with sectoral criticality assessment, to improve disaster impact analysis.

Findings

Disaster-affected regions face severe negative impacts.

Larger export-oriented regions may benefit from increased activity.

Trade flexibility is crucial for disaster impact mitigation.

Abstract

Disasters often impact supply chains, leading to cascading effects across regions. While unaffected regions may attempt to compensate, their ability is constrained by their available production capacity and logistical constraints between regions. This study introduces a Multi-Regional Impact Assessment (MRIA) model to evaluate the regional and macroeconomic consequences of disasters, capturing regional post-disaster trade dynamics and logistical constraints. Our findings emphasize that enhancing production capacity alone is inadequate; regional trade flexibility must also be improved to mitigate disaster impacts. At the regional level, disaster-affected areas experience severe negative impacts, whereas larger, export-oriented regions benefit from increased production activity. Additionally, we propose a sectoral criticality assessment alongside the more common sensitivity and incremental disruption analysis, which effectively identifies sectors with low redundancy while accounting for the potential for regional substitution in a post-disaster scenario.