Computable General Equilibrium Modeling of Electric Utility Lifeline Losses from Earthquakes

Abstract

Losses from earthquakes are usually associated with building and other property damage. However, many businesses are forced to shut down, even if physically unscathed, when suppliers of lifeline services or other inputs are disrupted, or if their employees are unable to reach the workplace. Likewise, businesses may be forced to curtail operations if orders for their products are canceled by their customers, or if they are unable to deliver their products to market. Moreover, these impacts pertain not only to immediate suppliers and customers, but to successive rounds of upstream or downstream links. The totality of these impacts is some multiple of the businesses directly impacted, hence the typical application of some form of “multiplier” analysis.

The research contained in this chapter was funded by a grant from the Multidisciplinary Center for Earthquake Engineering Research. The authors wish to thank Gbadebo Oladosu, Chunsheng Shang, and Shu-Yi Liao for their advice on the computer simulations. An earlier version of this chapter was presented at the American Society of Civil Engineers 5th U.S. Conference on Lifeline Earthquake Engineering, Seattle, WA, August 1999, and at the North American Regional Science Association International Meetings, Montreal, Canada, November, 1999. The authors thank the discussants of these conferences and an anonymous reviewer for helpful comments on this chapter.