Framework for modeling multi-sector business closure length in earthquake-struck regions

Abstract

Regions impacted by natural disasters such as earthquakes may suffer enormously from interruptions to their economic systems, which usually have long-lasting and profound impacts. Business closure length (BCL), which refers to the post-disaster period during which businesses completely stop their operation, is a critical indicator of the overall impacts of disaster-induced business interruptions. This study proposes a new analytical framework for modeling the BCL of businesses in different economic sectors, based on the downtimes of their operation factors. The proposed framework first identifies the essential operation factors of businesses in each sector. Then, for each individual business, the framework quantifies the downtimes of its operation factors, and establishes the quantitative relationships between these downtimes and the BCL of the business. A case study of Mianzhu, a county located in the most impacted region during the 2008 Wenchuan Earthquake, was conducted to test the performance of the proposed framework. Particularly, the BCL of businesses in the manufacturing and retailing sectors in Mianzhu was examined. The results showed that the proposed framework could estimate the BCL of all businesses with promising accuracies. The results also demonstrated that the framework could distinguish the sector-specific dependence of businesses on different operation factors, and could reflect the fact that the reopening of businesses does not require all operation factors to be fully restored to the pre-disaster level. The practical implications of the findings, and the potential of the framework to be extended for predicting the BCL before earthquakes happen, are also discussed in the paper.