Understanding Business Disruption and Economic Losses Due to Electricity Failures and Flooding

Abstract

Failure of critical national infrastructures can cause disruptions with widespread economic impacts. To analyze these economic impacts, we present an integrated modeling framework that combines: (1) geospatial information on infrastructure assets/networks and the natural hazards to which they are exposed; (2) geospatial modeling of the reliance of businesses upon infrastructure services, in order to quantify disruption to businesses locations and economic activities in the event of infrastructure failures; and (3) multiregional supply-use economic modeling to analyze wider economic impacts of disruptions to businesses. The methodology is exemplified through a case study for the United Kingdom. The study uses geospatial information on the location of electricity infrastructure assets and local industrial areas, and employs a multiregional supply-use model of the UK economy that traces the impacts of floods of different return intervals across 37 subnational regions of the UK. The results show up to a 300% increase in total economic losses when power outages are included in the risk assessment, compared to analysis that just includes the economic impacts of business interruption due to flooded business premises. This increase indicates that risk studies that do not include failure of critical infrastructures may be underestimating the total losses.

Publication
International Journal of Disaster Risk Science
Elco Koks
Elco Koks
Vrije Universiteit Amsterdam
Raghav Pant
Raghav Pant
Senior Research Associate

Dr. Raghav Pant is a Senior Postdoctoral Research Associate at the Environmental Change Institute

Scott Thacker
Scott Thacker
United Nations
Jim Hall
Jim Hall
Professor of Climate and Environmental Risk

Prof. Jim Hall FREng is Professor of Climate and Environmental Risks in the University of Oxford and Director of Research in the School of Geography and the Environment.