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http://dx.doi.org/10.15266/KEREA.2014.23.4.689

Analysing the Economic Effects of Flood Damage by Dynamic CGE Model  

Jeong, Kiho (School of Economics and Trade, Kyungpook National University)
Whang, Sungyoon (Department of International Trade on FTA, Kyungpook National University)
Publication Information
Environmental and Resource Economics Review / v.23, no.4, 2014 , pp. 689-718 More about this Journal
Abstract
This study analyzes the ripple effects on the national economy of the flood damage using a perfect foresight dynamic CGE model for 2010 as the base year in case that the flood damage reduces the capital of the relevant industrial sectors. The analysis is limited to the items of physical damage such as agricultural land, ships and public facilities, for which statistical data can be obtained. As flood damage scenarios we adopt the minimum, maximum and average value of flood damage's historical data over the period 1991~2010 for each item. The results show that the largest production decline happens to the industry of fishing and transport and the next largest to the agricultural and forestry industry. The GDP reduction in the base year turns out to be from 0.001 to 0.057 percent compared to the benchmark and 11 percent compared to the exogenous shock to capital stock. Dynamically, the GDP gradually decreases until the year of 2030, which shows the long-lasting impact on the national economy of flood damage via the chanel of the capital damage.
Keywords
Economic ripple effect; Dynamic CGE model; Flood damage;
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