FEEM working papers "Note di lavoro" series
2014 .082

Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling


Authors: Lorenzo Carrera, Gabriele Standardi, Francesco Bosello, Jaroslav Mysiak
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: J
Keywords: Flood Risk, Indirect Impacts, Computable General Equilibrium, Natural Disasters
JEL n.: Q5, Q54
JEL: Environmental Modelling & Software
Pages: Volume 63, Pages 109-122
Date: 01/2015

Abstract

In this paper we developed and tested an integrated methodology for assessing direct and indirect economic impacts of flooding. The methodology combines a spatial analysis of damage to physical stocks with a general economic equilibrium approach using a regionally-calibrated (to Italy) version of a Computable General Equilibrium (CGE) global model. We applied the model to the 2000 Po river flood. To account for the uncertainty in the induced effects on regional economies, we explored three disruption and two recovery scenarios. The results prove that: i) indirect losses are a significant share of direct losses, and ii) the model is able to capture both positive and negative economic effects of a disaster in different areas of the same country. The assessment of indirect impacts is essential for a full understanding of the economic outcomes of natural disasters.

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Suggested citation: Carrera,  L., G. Standardi, F. Bosello, J. Mysiak (2014), 'Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling', Environmental Modelling & Software, Volume 63, January 2015, Pages 109-122, ISSN 1364-8152, http://dx.doi.org/10.1016/j.envsoft.2014.09.016

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