The Economic Impact of the Great East Japan Earthquake: Comparison with other disasters, supply chain disruptions, and electric power supply constraint (Japanese)

The Great East Japan Earthquake of March 11, 2011 had a serious negative impact on the Japanese economy. The earthquake reduced production substantially not only in the regions that were directly affected but also throughout Japan via the disruption of supply chains. The meltdowns at the Fukushima Daiichi Nuclear Power Plant caused the shutdown of many other nuclear power plants as a result of a greater awareness of the risks associated with operating them in a country prone to earthquakes and tsunamis. Chapter 1 of this paper surveys previous research on the economic impacts of various disasters around the world, and compares them with that of the Great East Japan Earthquake. Chapter 2 examines the economic impact of the supply chain disruptions immediately following the earthquake using regional input-output (IO) tables, the Japanese Industrial Productivity (JIP) database, and other statistics, and analyzes its scale as well as the extent of the damage mitigating effect of building multiple supply chains to cope with potential natural disasters in the future. Chapter 3 also uses regional IO tables, the JIP database, and other statistics to examine the economic impact of the power shortages immediately after the earthquake and, in addition, in the coming few years. The main finding of Chapter 3 shows that electricity shortages may reduce domestic production substantially in the coming years, while the expected increase in electricity prices will not lead to a sharp increase in output prices in the other sectors of the economy apart from the electricity sector itself.