Allocating assistance after a catastrophe based on the dynamic assessment of indirect economic losses

Abstract

In 2008, Wenchuan earthquake shook Sichuan Province in China. The questions of how to value the economic loss that would result if a catastrophe were to occur in Capital Beijing and how long the recovery period would last have long been topics of concern for the government and the public. This study envisions an earthquake similar to the Wenchuan earthquake occurring in Beijing and examines the differences in indirect economic loss and recovery periods between Beijing and the Wenchuan earthquake using the same loss rate. An improved input–output model is used to evaluate the indirect losses. The results show that (1) Beijing experiences greater indirect loss than Sichuan. When both regions suffer a direct loss of USD 100, Beijing suffers USD 12 more in indirect loss than does Sichuan. (2) The reconstruction period of Beijing is shortened by at least 5 months, and indirect loss is reduced by 27.1% if the assistance level increases from 120 to 150% of that provided to Sichuan. (3) High assistance efficiencies can effectively reduce total losses, but increasing the efficiency of strength is more efficient than improving the efficiency of time in Beijing. Five sectors in Beijing are firstly needed to be assisted to recover, which can help other sectors to recover more quickly and efficiently through industrial linkages. Dynamic assessment of indirect loss in this study may help the government better understand the quantitative impact of disasters and allocate assistance resources more efficiently in Beijing.