National Interstate Economic Model Research Articles

Widening the Panama Canal and U.S. ports: historical and economic impact analyses

ABSTRACTThe economic history of the U.S. illustrates how the role of many cities has been changed by being seaports or located on navigable rivers or lakes. Based on the widening of the Panama Canal in 2016, the West Coast ports that include the west coast seaports of California, Oregon, and Washington were expected to become less important, while the freight shares of the East Coast and Gulf ports would increase. By how much it has been not easy to measure or predict so far, but this study attempted to define some of the key parameters in the measurement. As well as several relevant background topics, both the demand- and supply-side versions of the National Interstate Economic Model, have been applied for the measurement of economic impacts. U.S. port authorities and policy makers at the local and national levels who respond and develop plans for coping with the new realities of the Panama Canal are able to understand the extent to which changes in shippers’ and land-mode transporters’ behaviors would undermine the logistics and the costs of their activities. Therefore, this study is important for a diverse spectrum of port development strategies in the U.S. to respond to the Canal expansion.

A New Approach to Quantifying the Impact of Hurricane-Disrupted Oil Refinery Operations Utilizing Secondary Data

This study suggests a new framework that empirically quantifies the temporally disaggregate economic impacts. Utilizing only secondary data, including post-event information on concurrent demand and value-added changes in the wake of Hurricanes Katrina and Rita, the framework is used to identify the technological changes in production that actually occurred after a major disruption. Two methodologies are developed for the framework and data analysis: a quasi-experimental model and an economic model. The Holt–Winters time-series approach is used to estimate normal economic trends under the assumption that the two hurricanes had not occurred, and the results are compared to actual trends. The gaps between the estimated and actual trends represent the direct impacts. We utilized the flexible national interstate economic model to construct a month-to-month supply-side version of the national interstate economic model and measure the total economic impacts of Hurricanes Katrina and Rita by month, state and industry, including adaptations. The new framework, which provides estimates of economic impact adaptation process and resilient results, refines the often substantially overstated impacts provided by the application of conventional economic models. The suggested approach can be used to address questions about the effects of time, distance, and industry linkages, and hence the dynamics of conflict activities.

Natural disasters and deterrence of economic innovation: a case of temporary job losses by Hurricane Sandy

Quantifying many natural disasters economically is a global concern. Even in the U.S., economic damages stemming from natural disasters are experienced annually. Unexpected natural disasters result in various economic and business management disruptions. Especially, complex inter-industrial and inter-regional connections in established economies may experience much larger impacts by a disaster, and hence, the economic and business losses need to count not only the direct, actual lost value of business during the disrupted period, but also the indirect, latent lost value that would not have occurred. In the U.S., severe economic damages generated by the two hurricanes that hit the Gulf of Mexico in August 2005 were recorded in the history; however, this hurricane-generated economic loss is still being experienced. Hurricane Sandy occurred in 2012 is recorded as one of the largest storms ever to mash American territory. The hurricane-caused disruptions of metro built environments and natural environmental systems demonstrated how fragile New York City (NYC) and Long Island areas are from hurricanes and storm surges. This promptly generated a new discussion of building coastal barriers surrounding the shorelines of the areas, expecting to minimize the destructive risk from a similar event in the future. An issue that was not seriously explored in this discussion is how to account for economic damages more extensively and accurately. Majority studies of estimating economic damages rely on governmental reports that mostly focus on the magnitude of building losses directly damaged or on speculations about future impacts on the area already damaged. However, when considering inter-industrial and inter-regional economic connections which are becoming more complicated, accounting for the indirectly connected ripple impacts is important in the market economies because recovery from economic damages requires an understanding of resilient paths of the lost business production. This study provides a procedure to estimate a type of interconnected economic damages based on the National Interstate Economic Model (NIEMO) and the temporarily lost jobs using Census data during the first 4 days caused by Hurricane Sandy. By tracing Sandy’s moving path from Florida to New Hampshire, it was found that Sandy had brought another tragedy mainly to the NYC and Long Island areas, reaching $2.8 billion in 4 days with 99% of the loss occurring in the last day of Sandy. Furthermore, the national impacts attained $10 billion losses according to the NIEMO analysis. Technological innovation that may support various mitigation and prevention policies would reduce the economic losses, expediting recovery to the normal status of U.S. economy.

The ties that bind: Bi-national trade implications of the US and Canada using bi-national freight movement network via border crossings

This study combines US-Canada bi-national highway network data with a freight flow dataset using ports of entry (POE) via highway border crossings. Through several sub-procedures, the US and Canada highway systems are integrated into a single network dataset. In addition, border wait time dataset was monitored and analyzed to set the border delay baseline. This dataset enables us to explore the freight traffic pattern between the US and Canada. Weighted Eigenvector Score is computed using a Social Network Analysis tool. The results demonstrate that major regional bodies are the primary users of major POE between the US and Canada. This study not only offers an improved understanding of the economic implications of US–Canada border crossings, but also contributes to developing a simulation tool, a bi-national Transportation-combined National Interstate Economic Model. Such a tool is expected to extend and apply to other contexts, such as transportation and national and bi-national security, among other applications. Additionally, this study suggests several important considerations for US and Canadian officials charged with devising policy to protect against security threats while facilitating legitimate flows of goods, services and people across the border.

The Gulf Oil Spill and Economic Impacts: Extending the National Interstate Economic Model (NIEMO) to Account for Induced Impacts

There has been considerable controversy about the economic impacts of the federal Gulf deepwater oil drilling suspensions following the oil spill. In this study, we elaborate and apply the National Interstate Economic Model (NIEMO) to estimate direct, indirect and induced economic losses in each of the 50 states (and the District of Columbia). We simulate the effects of three separate, 6-month direct loss scenarios of media guestimates reported by several local sources. While the traditional NIEMO application only captured direct and indirect impacts, we developed a new module to estimate local induced impacts as well. This methodology could be applied to any similar scenario. Our model extension and application suggest a useful approach to tasks such as the one assigned to Gulf Coast Claims Facility administrator Kenneth Feinberg. The terror threat, as well as the possibility of other mishaps and natural disasters, suggests that this is always a serious possibility that these sorts of calculations will have to be made. Our innovation was to estimate the Type-II effects in the impacted states and to trace their trade effects through the NIEMO system with only minor methodological elaborations.

Adding a freight network to a national interstate input–output model: a TransNIEMO application for California

The state of the nation’s infrastructure is the subject of widespread discussion and comment because it is thought to include many deteriorating and unsafe bridges. Ever since the terrorist attacks of 9/11, there has been increasing concern over the extent to which an attack on infrastructure could result in serious economic disruption. This research develops a model to analyze the economic consequences of an attack on a major element of the highway network. We add a freight network to a national multiregional economic impact model and make freight traffic flows endogenous. The use of a sub-national interstate model recognizes that most infrastructure planning is at the state level and most political leaders’ interest is local. We base our approach on the National Interstate Economic Model (NIEMO) and refer to an elaboration that we name Transportation network and the National Interstate Economic Model (TransNIEMO). The new model enables us to study the state-specific and industry-specific economic impacts of some significant changes in the nature of highway freight movements. We tested the model for selected freight movements in and out of California. The results are entirely plausible and encourage us to elaborate and test the model for hypothetical disruptions of freight traffic throughout the US.

Estimating the State-by-State Economic Impacts of a Foot-and-Mouth Disease Attack

The agricultural sector is highly vulnerable to bioterrorism attacks with the potential for severe economic consequences. This article presents estimates of state-by-state total economic impacts of a hypothetical agroterrorism attack that uses foot-and-mouth disease (FMD) pathogens, which is one of the most contagious animal diseases and can be easily weaponized. The authors estimate the economic impacts across the U.S. states by applying the National Interstate Economic Model (NIEMO), a multiregional input output (MRIO) model. Total economic impacts range from $23 billion to $34 billion. The overwhelming sources of the losses are due to domestic and international demand cuts. The results of this research highlight the point that the economic impacts are nationwide, regardless of the location of the attack because of large-scale export losses.

The State‐by‐State Economic Impacts of the 2002 Shutdown of the Los Angeles–Long Beach Ports

ABSTRACTIn previous research, the economic impacts of temporary shutdowns of the Los Angeles–Long Beach harbors were simulated after a hypothetical terrorist attack, applying the National Interstate Economic Model to estimate state‐by‐state as well as interindustry impacts. However, the unpredictable characteristic of terrorist attacks might not be applicable to the case of a ports shutdown such as the one caused by the lockout of September–October 2002. Market participants can be expected to have contingency plans based on anticipations of a strike or shutdown. Can we identify any of these in terms of the use of alternate ports, in terms of alternate modes or even alternate time periods? The purpose of this study is to examine these questions. The approach is elaborated by testing for the possible effects of trade diversion to other West Coast ports, transportation modes, and intertemporal substitutions. We use data from WISERTrade describing commodity‐specific trade for the major West Coast ports before, during, and after the 11‐day shutdown of the fall of 2002. Shippers’ ability to divert trade is a key ingredient in the economy's ability to withstand attacks and disruptions. The work estimates the impacts on 47 industrial sectors across 50 states (and the District of Columbia).

A two-step approach to estimating state-to-state commodity trade flows

A major problem in developing interregional–interindustry models, including multiregional input–output (MRIO) models, is how to combine seemingly incompatible databases. This research aims to estimate state-to-state commodity trade flow tables by major industrial sectors for the US useful for creating an MRIO-type model, the National Interstate Economic Model (NIEMO). The model is based on IMPLAN and related data for 2001. Constructing NIEMO was challenging because of the limited availability of commodity freight shipment data between the states. This helps to explain why a Chenery-Moses-type model such as NIEMO has not been developed in recent years. Two basic sets are necessary to construct NIEMO. Interregional trade tables to estimate trade coefficients by states and industry had been available from the US Commodity Transportation Survey Data since 1977, but reporting was discontinued for some years. For the years since 1993, this data deficit can be met to some extent with the recent Commodity Flow Survey (CFS) data from the Bureau of Transportation Statistics (BTS). Available since 1993, the CFS data are widely used, but they have several inherent problems. Recent attempts to estimate interregional trade flows using data from the 1997 CFS, based on IMPLAN data made this clear to us. This study suggests a new approach to estimate the trade tables between all 50 states plus D.C. and the rest of the world. These tables are assembled via a two-step method, to adjust for incomplete reported trade flows, and to update the adjusted trade flows by estimating values via a Fratar Model based on the 1997 CFS data. Reconciliation of the IMPLAN and CFS databases presents various problems that are addressed in this paper.

The Economic Impacts of Dirty Bomb Attacks on the Los Angeles and Long Beach Ports: Applying the Supply-Driven NIEMO (National Interstate Economic Model)

As homeland security policy makers seek to funnel scarce resources to the most vulnerable areas, geographic impact studies have become ever more crucial since the events of September 11, 2001. In the sense that the Los Angeles and Long Beach ports are among the largest in the world, service interruptions there would have nation-wide economic impacts. Because foreign and domestic imports are in greater volumes than exports, the interruption of imports should be examined with a supply-side MRIO-type model. Hence, a new supply-side National Interstate Economic Model (NIEMO) yields extra information with important political implications – in addition to the previously estimated demand-side results – because both simulations show that terrorist attacks in one state have significant economic impacts in other states. Especially in the U.S. Senate where political power is evenly distributed among the states, the supply-side and demand-side results could help garner nationwide support for prevention measures in specific places, often distant from the states where the measures are taken.