Regional economic impact analysis of earthquakes in northern Taiwan and its implications for disaster reduction policies

Abstract

The direct damage caused by earthquakes, such as impaired buildings, may interfere with normal business operations and disrupt the function of the industrial chain. Such economic impacts can be evaluated using the input–output analysis developed by Leontief. In this paper, two scenario earthquakes in northern Taiwan both with a return period of 475 years—the Hsinchu Hsincheng and the Yilan Nan-ao earthquakes—are simulated. The results show that the economic impact caused by the Hsincheng earthquake is greater than that resulting from the Nan-ao earthquake, which should be the major scenario considered for the disaster reduction plan. The industries affected the most are the manufacturing, food services and entertainment, storage and retail trade, and public and construction industries. The Nan-ao earthquake causes relatively more losses in the food services and entertainment industries. Most of the repercussion effects of these industries are in the central and southern parts of Taiwan. The loss to the manufacturing sector and its repercussion effects are enormous. Therefore, the government should make it a first priority to encourage the manufacturing sector to implement earthquake mitigations, such as a seismic retrofit, or to provide a seismic evaluation, which can enable firms to engage in mitigation voluntarily. The measure needed to reduce the loss in agriculture is that the government can purchase agricultural products in central and southern Taiwan following the disaster and offer them to survivors in northern Taiwan.