Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs

Based on an IO structure, the ARIO-inventory model simulates the economic consequences and responses to a natural disaster. It represents explicitly production bottlenecks, models a flexibility in production capacity in case of scarcity, and introd...

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Main Author:	Hallegatte, Stéphane
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING AGRICULTURE BANKRUPTCY BUSINESS RELATIONSHIP BUSINESS SERVICES BUSINESSES CHEMICALS COMMODITIES COMMODITY CONSUMER MARKETS CONSUMERS DAMAGES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISASTER PREVENTION DISASTER SITUATIONS DRIVERS DURABLE GOODS EARTHQUAKE EARTHQUAKES ECONOMETRIC ANALYSES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC COSTS ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC MODELS ECONOMIC SECTORS ECONOMIC STRUCTURE ECONOMIC SYSTEMS ELASTICITY ELASTICITY OF SUBSTITUTION ELECTRICITY EMAIL ADDRESS EQUILIBRIUM EQUIPMENT EQUIPMENTS EXPORTS FAIR FINANCIAL SERVICES FLOOD FLOODS FUTURE RESEARCH GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM ANALYSIS GLOBAL SUPPLY CHAINS GROWTH RATE GROWTH THEORIES HURRICANE HURRICANES ICAP INDUSTRIAL PRODUCTION INSURANCE INTERMEDIATE GOODS INVENTORIES INVENTORY INVENTORY LEVEL INVENTORY LEVELS MANUFACTURING MARKET EQUILIBRIUM NATURAL DISASTER NATURAL DISASTERS NATURAL HAZARDS NETWORKS OPEN ACCESS OUTPUTS OUTSOURCING PAYMENT SYSTEM POLITICAL ECONOMY PRICE INCREASES PRICE LEVELS PRICE REGULATION PRIVATE SECTOR PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PURCHASING RECONSTRUCTION RESULT RESULTS RETAIL RETAIL TRADE SALES SENSITIVITY ANALYSES SENSITIVITY ANALYSIS SIGNALING EFFECT SITES SKILLED WORKERS SMALL BUSINESS SOCIOECONOMIC IMPACTS STICKY PRICES STORM SUBSTITUTE SUBSTITUTES SUPPLIER SUPPLIERS TERRORISM TIME PERIOD TOTAL OUTPUT TRANSACTION TRANSPORT SYSTEM TRANSPORTATION NETWORK USES VALUE ADDED VOLCANO WAGES WEB WHOLESALE TRADE
Online Access:	http://documents.worldbank.org/curated/en/2012/04/16237455/modeling-roles-heterogeneity-substitution-inventories-assessment-natural-disaster-economic-costs http://hdl.handle.net/10986/6050

id	okr-10986-6050
recordtype	oai_dc
spelling	okr-10986-60502021-04-23T14:02:24Z Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs Hallegatte, Stéphane ACCOUNTING AGRICULTURE BANKRUPTCY BUSINESS RELATIONSHIP BUSINESS SERVICES BUSINESSES CHEMICALS COMMODITIES COMMODITY CONSUMER MARKETS CONSUMERS DAMAGES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISASTER PREVENTION DISASTER SITUATIONS DRIVERS DURABLE GOODS EARTHQUAKE EARTHQUAKES ECONOMETRIC ANALYSES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC COSTS ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC MODELS ECONOMIC SECTORS ECONOMIC STRUCTURE ECONOMIC SYSTEMS ELASTICITY ELASTICITY OF SUBSTITUTION ELECTRICITY EMAIL ADDRESS EQUILIBRIUM EQUIPMENT EQUIPMENTS EXPORTS FAIR FINANCIAL SERVICES FLOOD FLOODS FUTURE RESEARCH GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM ANALYSIS GLOBAL SUPPLY CHAINS GROWTH RATE GROWTH THEORIES HURRICANE HURRICANES ICAP INDUSTRIAL PRODUCTION INSURANCE INTERMEDIATE GOODS INVENTORIES INVENTORY INVENTORY LEVEL INVENTORY LEVELS MANUFACTURING MARKET EQUILIBRIUM NATURAL DISASTER NATURAL DISASTERS NATURAL HAZARDS NETWORKS OPEN ACCESS OUTPUTS OUTSOURCING PAYMENT SYSTEM POLITICAL ECONOMY PRICE INCREASES PRICE LEVELS PRICE REGULATION PRIVATE SECTOR PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PURCHASING RECONSTRUCTION RESULT RESULTS RETAIL RETAIL TRADE SALES SENSITIVITY ANALYSES SENSITIVITY ANALYSIS SIGNALING EFFECT SITES SKILLED WORKERS SMALL BUSINESS SOCIOECONOMIC IMPACTS STICKY PRICES STORM SUBSTITUTE SUBSTITUTES SUPPLIER SUPPLIERS TERRORISM TIME PERIOD TOTAL OUTPUT TRANSACTION TRANSPORT SYSTEM TRANSPORTATION NETWORK USES VALUE ADDED VOLCANO WAGES WEB WHOLESALE TRADE Based on an IO structure, the ARIO-inventory model simulates the economic consequences and responses to a natural disaster. It represents explicitly production bottlenecks, models a flexibility in production capacity in case of scarcity, and introduces inventories as an additional flexibility in the production system. Moreover, it takes into account the heterogeneity in goods and services within sectors, and the consequences on production bottlenecks and substitution possibilities. The model is applied to the landfall of hurricane Katrina in Louisiana. Sensitivity analyses show that results are extremely sensitive to several uncertain model parameters. In particular, accounting for heterogeneity within sectors has a large negative influence on production bottlenecks, and thus increases total economic losses from natural disasters and other supply-side shocks. This paper shows that current models disregard important mechanisms and proposes an approach to take them into account. 2012-04-27T07:44:38Z 2012-04-27T07:44:38Z 2012-04 http://documents.worldbank.org/curated/en/2012/04/16237455/modeling-roles-heterogeneity-substitution-inventories-assessment-natural-disaster-economic-costs http://hdl.handle.net/10986/6050 English Policy Research Working Paper ; No. 6047 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research North America United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING AGRICULTURE BANKRUPTCY BUSINESS RELATIONSHIP BUSINESS SERVICES BUSINESSES CHEMICALS COMMODITIES COMMODITY CONSUMER MARKETS CONSUMERS DAMAGES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISASTER PREVENTION DISASTER SITUATIONS DRIVERS DURABLE GOODS EARTHQUAKE EARTHQUAKES ECONOMETRIC ANALYSES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC COSTS ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC MODELS ECONOMIC SECTORS ECONOMIC STRUCTURE ECONOMIC SYSTEMS ELASTICITY ELASTICITY OF SUBSTITUTION ELECTRICITY EMAIL ADDRESS EQUILIBRIUM EQUIPMENT EQUIPMENTS EXPORTS FAIR FINANCIAL SERVICES FLOOD FLOODS FUTURE RESEARCH GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM ANALYSIS GLOBAL SUPPLY CHAINS GROWTH RATE GROWTH THEORIES HURRICANE HURRICANES ICAP INDUSTRIAL PRODUCTION INSURANCE INTERMEDIATE GOODS INVENTORIES INVENTORY INVENTORY LEVEL INVENTORY LEVELS MANUFACTURING MARKET EQUILIBRIUM NATURAL DISASTER NATURAL DISASTERS NATURAL HAZARDS NETWORKS OPEN ACCESS OUTPUTS OUTSOURCING PAYMENT SYSTEM POLITICAL ECONOMY PRICE INCREASES PRICE LEVELS PRICE REGULATION PRIVATE SECTOR PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PURCHASING RECONSTRUCTION RESULT RESULTS RETAIL RETAIL TRADE SALES SENSITIVITY ANALYSES SENSITIVITY ANALYSIS SIGNALING EFFECT SITES SKILLED WORKERS SMALL BUSINESS SOCIOECONOMIC IMPACTS STICKY PRICES STORM SUBSTITUTE SUBSTITUTES SUPPLIER SUPPLIERS TERRORISM TIME PERIOD TOTAL OUTPUT TRANSACTION TRANSPORT SYSTEM TRANSPORTATION NETWORK USES VALUE ADDED VOLCANO WAGES WEB WHOLESALE TRADE
spellingShingle	ACCOUNTING AGRICULTURE BANKRUPTCY BUSINESS RELATIONSHIP BUSINESS SERVICES BUSINESSES CHEMICALS COMMODITIES COMMODITY CONSUMER MARKETS CONSUMERS DAMAGES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISASTER PREVENTION DISASTER SITUATIONS DRIVERS DURABLE GOODS EARTHQUAKE EARTHQUAKES ECONOMETRIC ANALYSES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC COSTS ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC MODELS ECONOMIC SECTORS ECONOMIC STRUCTURE ECONOMIC SYSTEMS ELASTICITY ELASTICITY OF SUBSTITUTION ELECTRICITY EMAIL ADDRESS EQUILIBRIUM EQUIPMENT EQUIPMENTS EXPORTS FAIR FINANCIAL SERVICES FLOOD FLOODS FUTURE RESEARCH GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM ANALYSIS GLOBAL SUPPLY CHAINS GROWTH RATE GROWTH THEORIES HURRICANE HURRICANES ICAP INDUSTRIAL PRODUCTION INSURANCE INTERMEDIATE GOODS INVENTORIES INVENTORY INVENTORY LEVEL INVENTORY LEVELS MANUFACTURING MARKET EQUILIBRIUM NATURAL DISASTER NATURAL DISASTERS NATURAL HAZARDS NETWORKS OPEN ACCESS OUTPUTS OUTSOURCING PAYMENT SYSTEM POLITICAL ECONOMY PRICE INCREASES PRICE LEVELS PRICE REGULATION PRIVATE SECTOR PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PURCHASING RECONSTRUCTION RESULT RESULTS RETAIL RETAIL TRADE SALES SENSITIVITY ANALYSES SENSITIVITY ANALYSIS SIGNALING EFFECT SITES SKILLED WORKERS SMALL BUSINESS SOCIOECONOMIC IMPACTS STICKY PRICES STORM SUBSTITUTE SUBSTITUTES SUPPLIER SUPPLIERS TERRORISM TIME PERIOD TOTAL OUTPUT TRANSACTION TRANSPORT SYSTEM TRANSPORTATION NETWORK USES VALUE ADDED VOLCANO WAGES WEB WHOLESALE TRADE Hallegatte, Stéphane Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
geographic_facet	North America United States
relation	Policy Research Working Paper ; No. 6047
description	Based on an IO structure, the ARIO-inventory model simulates the economic consequences and responses to a natural disaster. It represents explicitly production bottlenecks, models a flexibility in production capacity in case of scarcity, and introduces inventories as an additional flexibility in the production system. Moreover, it takes into account the heterogeneity in goods and services within sectors, and the consequences on production bottlenecks and substitution possibilities. The model is applied to the landfall of hurricane Katrina in Louisiana. Sensitivity analyses show that results are extremely sensitive to several uncertain model parameters. In particular, accounting for heterogeneity within sectors has a large negative influence on production bottlenecks, and thus increases total economic losses from natural disasters and other supply-side shocks. This paper shows that current models disregard important mechanisms and proposes an approach to take them into account.
format	Publications & Research :: Policy Research Working Paper
author	Hallegatte, Stéphane
author_facet	Hallegatte, Stéphane
author_sort	Hallegatte, Stéphane
title	Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
title_short	Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
title_full	Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
title_fullStr	Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
title_full_unstemmed	Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs
title_sort	modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/04/16237455/modeling-roles-heterogeneity-substitution-inventories-assessment-natural-disaster-economic-costs http://hdl.handle.net/10986/6050
_version_	1764397244468953088

Modeling the Roles of Heterogeneity, Substitution, and Inventories in the Assessment of Natural Disaster Economic Costs

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