An NEG Analysis of Megathrust Earthquakes in Japan

Abstract

This chapter investigates the impact of megathrust earthquakes on Japanese regional structure. Even after the Great East Japan Earthquake in 2011, there are serious concerns about predicted earthquakes in the near future; for instance, Tokyo Metropolitan Area (M. A.) earthquakes (expected to occur just in Tokyo M.A.), Tokai earthquakes (expected to occur in the area facing the Pacific Ocean on the west side of Tokyo M.A.), and Nankai megathrust earthquake (expected to occur in the area facing the Pacific Ocean on the west side of Kansai M.A.). In this chapter, we focus on the Great East Japan Earthquake and the Nankai megathrust earthquakes and the associated tsunami and consider how they changed the regional economies of Japan. Constructing an NEG model composed of the 47 prefectures of Japan, simulation results show that the predicted labor distribution approaches the actual distribution and as transportation costs decrease, labor distribution changes from dispersion to agglomeration in the metropolitan areas and then to re-dispersion in rural areas. In addition, adapting the damage data of megathrust earthquakes to this model, we predict the impact of the Great East Japan Earthquake and a Nankai megathrust earthquake on the regional potential and labor distribution among the prefectures. The simulation result of a Nankai megathrust earthquake predicts that the indirect utility levels in the affected prefectures fall by 1%, and the resulting outflow of refugees reduces the prefectural population by 3% in the worst case.