Economic Impact Analyses of Interdisciplinary Multi-hazard Scenarios: ShakeOut and ARkStorm

U. S. Geological Survey (USGS) scientists are using an interdisciplinary strategy to develop and analyze multi-hazard scenarios to help communities enhance resilience to natural hazard disasters. Two such scenarios are the southern California ShakeOut earthquake and the California ARkStorm winter storm. Both scenarios are multi-hazard: Shakeout ground motions trigger landslides and liquefaction and ARkStorm involves wind, flood, landslide, and coastal hazards. A collaborative scenario-process engages partners and stakeholders throughout the development and use of the scenarios, In doing so, community resilience is enhanced by educating communities about hazards and hazard interdependencies, building networks from scientists to decision makers, exercising emergency management strategies, identifying emergency management issues, and motivating solutions prior to an event. In addition, interdisciplinary scenarios stimulate research on the various steps of analysis (e.g., natural hazard processes, physical damages, societal consequences, and policy connections). In particular, USGS scientists have collaborated with economists to advance methods to estimate the economic impacts (business interruption losses) of disasters. Our economic impact analyses evolved from the economic module in the Federal Emergency Management Agency's loss-estimation tool, HAZUS-MH, to a more encompassing input-output analysis for ShakeOut, to a more sophisticated Computable General Equilibrium model for ARkStorm. The analyses depend on physical damage and restoration time estimates from engineers and geographic analyses of economic assets in hazard zones. Economic resilience strategies are incorporated to represent resourcefulness and ingenuity that avoids potential losses during and after an event. Such strategies operate at three levels of the economy: micro (e.g., ability to catch up on lost production time), meso (e.g., coordination within a sector to share resources), and macro (e.g., price adjustments to redistribute scarce resources). A sensitivity analysis of the ARkStorm economic impact model explores the effects of 1) the magnitude of the shocks (e.g., flood damages to buildings and infrastructure, agricultural productivity, and lifeline service disruptions), 2) the sustainability of the economic resilience strategies, and 3) the amount, timing, and source of reconstruction funds. The inclusion of an economic analysis in ShakeOut and ARkStorm broadens the range of interest in the scenario results. For example, the relative contribution of ShakeOut economic shocks to business interruption losses emphasized the need to reduce the impacts of fire following earthquake and water service disruption. Based on the magnitude and duration of the economic impacts for the ARkStorm scenario, policy experts surmised that business interruption policy time elements would be exceeded and business interruptions would be largely unfunded calling attention to the need for innovative funding solutions. Finally, economic impact analyses inform the question of paying now to mitigate or paying more later to recover.