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

Elco Koks*, Raghav Pant, Scott Thacker, Jim W. Hall

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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.

Original languageEnglish
Pages (from-to)421-438
Number of pages18
JournalInternational Journal of Disaster Risk Science
Volume10
Issue number4
Early online date24 Sept 2019
DOIs
Publication statusPublished - Dec 2019

Funding

We would like to thank the PBL Netherlands Environmental Assessment Agency, and in particular Dr. Mark Thissen, for providing the multiregional supply-use tables. The research reported in this article was part of the U.K. Infrastructure Transitions Research Consortium (ITRC) funded by the Engineering and Physical Sciences Research Council under Programme Grants EP/I01344X/1and EP/N017064/1. 1 The NUTS classification is a hierarchical system for dividing up the economic territory of the European Union for the purpose of the collection and development of European-wide statistics. NUTS2 regions are generally used for applications and analysis for regional policy making. Examples of NUTS2 regions are the inner-city of London and the city of Brussels.

FundersFunder number
PBL Netherlands Environmental Assessment Agency
Engineering and Physical Sciences Research CouncilEP/I01344X/2, EP/N017064/1

    Keywords

    • Economic impacts
    • Flood hazard
    • Indirect economic losses
    • Infrastructure failure
    • United Kingdom

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