Disaster Impacts Beyond Direct Damage: Assessing First- and Second-order Indirect Economic Impacts

Description

Frequent natural hazards trigger profound indirect economic impacts, challenging regional sustainability. To advance disaster risk management, this talk presents two complementary studies that deepen the micro-level understanding of these ripple effects. The first part will introduce a business-based model for quantifying indirect economic losses. It integrates business interruption (simulating changes in firm output and recovery) with ripple effects (using agent-based modelling to capture supply-demand disruptions), providing a tool to estimate indirect economic impacts from a micro-level, business-based perspective. Apart from this, the cascading effects extend beyond these production-side disruptions into the realm of household decision-making. The second part therefore shifts focus to individuals and households as critical agents. It will argue that existing models often overlook the complexity of micro-level behaviours, which can generate secondary indirect socioeconomic impacts. By examining behavioural patterns and their influence on disaster outcomes, this part highlights the necessity of integrating human behavioural complexity into impact assessments and resilience planning. Together, these perspectives—quantifying firm-level production losses and understanding household-level behavioural cascades—aim to provide a more comprehensive micro-foundation for assessing disasters and designing effective strategies.