Economic Consequence Analysis of the ARkStorm Scenario

AbstractThe business interruption (BI) impacts of ARkStorm, a severe winter storm scenario developed by the U.S. Geological Survey and partners, is estimated. BI stems from losses of building function, productivity of agricultural land, and lifeline services. A dynamic computable general equilibrium model of the California economy is developed to perform this economic consequence analysis. Economic resilience in the form of input and import substitution is inherent in the model’s equilibrium solution, and the model parameterization is adjusted to reflect other forms of resilience such as production recapture. Varying assumptions about the timing and source of funds for reconstruction results in a range of recovery paths. Five years after the storm, flood-induced building damage is the overwhelming source of gross domestic product (GDP) losses, timely and partially externally funded reconstruction mitigates impacts by approximately 50%, and the economy is not guaranteed to return to its baseline GDP trajectory. The methodology serves as a template for assessing the macroeconomic consequences of disasters and the influence of resilience in reducing BI losses.