IDEAS home Printed from https://ideas.repec.org/p/hal/pseptp/hal-00716554.html
   My bibliography  Save this paper

Firm-network characteristics and economic robustness to natural disasters

Author

Listed:
  • Fanny Henriet

    (DGEI-DEMS - Banque de France - Direction Générale des Etudes et des relations Internationales, Direction des Etudes Microéconomique et Structurelles, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Stéphane Hallegatte

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, Météo-France)

  • Lionel Tabourier

    (SPEC - UMR3680 - Service de physique de l'état condensé - IRAMIS - Institut Rayonnement Matière de Saclay (DRF) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

Abstract

This article proposes a theoretical framework to investigate economic robustness to exogenous shocks such as natural disasters. It is based on a dynamic model that represents a regional economy as a network of production units through the disaggregation of sector-scale input-output tables. Results suggest that disaster-related output losses depend on direct losses heterogeneity and on the economic network structure. Two aggregate indexes - concentration and clustering - appear as important drivers of economic robustness, offering opportunities for robustness-enhancing strategies. Modern industrial organization seems to reduce short-term robustness in a trade-off against higher efficiency in normal times. (C) 2011 Published by Elsevier B.V.

Suggested Citation

  • Fanny Henriet & Stéphane Hallegatte & Lionel Tabourier, 2012. "Firm-network characteristics and economic robustness to natural disasters," PSE-Ecole d'économie de Paris (Postprint) hal-00716554, HAL.
    • Handle: RePEc:hal:pseptp:hal-00716554
    DOI: 10.1016/j.jedc.2011.10.001
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stefan Weber & Kay Giesecke, 2003. "Credit Contagion and Aggregate Losses," Computing in Economics and Finance 2003 246, Society for Computational Economics.
    2. Y. Fujiwara & H. Aoyama, 2010. "Large-scale structure of a nation-wide production network," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 77(4), pages 565-580, October.
    3. Hallegatte, Stephane & Hourcade, Jean-Charles & Dumas, Patrice, 2007. "Why economic dynamics matter in assessing climate change damages: Illustration on extreme events," Ecological Economics, Elsevier, vol. 62(2), pages 330-340, April.
    4. Gatti, Domenico Delli & Guilmi, Corrado Di & Gaffeo, Edoardo & Giulioni, Gianfranco & Gallegati, Mauro & Palestrini, Antonio, 2005. "A new approach to business fluctuations: heterogeneous interacting agents, scaling laws and financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 489-512, April.
    5. Battiston, Stefano & Delli Gatti, Domenico & Gallegati, Mauro & Greenwald, Bruce & Stiglitz, Joseph E., 2007. "Credit chains and bankruptcy propagation in production networks," Journal of Economic Dynamics and Control, Elsevier, vol. 31(6), pages 2061-2084, June.
    6. Weisbuch, Gérard & Battiston, Stefano, 2007. "From production networks to geographical economics," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 448-469.
    7. E Romanoff & S H Levine, 1993. "Information, Interindustry Dynamics, and the Service Industries," Environment and Planning A, , vol. 25(3), pages 305-316, March.
    8. Sungbin Cho & Peter Gordon & James E. Moore II & Harry W. Richardson & Masanobu Shinozuka & Stephanie Chang, 2001. "Integrating Transportation Network and Regional Economic Models to Estimate the Costs of a Large Urban Earthquake," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 39-65, February.
    9. Nier, Erlend & Yang, Jing & Yorulmazer, Tanju & Alentorn, Amadeo, 2007. "Network models and financial stability," Journal of Economic Dynamics and Control, Elsevier, vol. 31(6), pages 2033-2060, June.
    10. B. Coluzzi & M. Ghil & S. Hallegatte & G. Weisbuch, 2010. "Boolean delay equations on networks: An application to economic damage propagation," Papers 1003.0793, arXiv.org.
    11. Giesecke, Kay & Weber, Stefan, 2006. "Credit contagion and aggregate losses," Journal of Economic Dynamics and Control, Elsevier, vol. 30(5), pages 741-767, May.
    12. Christopher W. Anderson & Joost R. Santos & Yacov Y. Haimes, 2007. "A Risk-based Input-Output Methodology for Measuring the Effects of the August 2003 Northeast Blackout," Economic Systems Research, Taylor & Francis Journals, vol. 19(2), pages 183-204.
    13. Adam Rose & Shu‐Yi Liao, 2005. "Modeling Regional Economic Resilience to Disasters: A Computable General Equilibrium Analysis of Water Service Disruptions," Journal of Regional Science, Wiley Blackwell, vol. 45(1), pages 75-112, February.
    14. Martínez-Jaramillo, Serafín & Pérez, Omar Pérez & Embriz, Fernando Avila & Dey, Fabrizio López Gallo, 2010. "Systemic risk, financial contagion and financial fragility," Journal of Economic Dynamics and Control, Elsevier, vol. 34(11), pages 2358-2374, November.
    15. V. Zlatic & G. Bianconi & A. Díaz-Guilera & D. Garlaschelli & F. Rao & G. Caldarelli, 2009. "On the rich-club effect in dense and weighted networks," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 67(3), pages 271-275, February.
    16. Albala-Bertrand, J. M., 1993. "Political Economy of Large Natural Disasters: With Special Reference to Developing Countries," OUP Catalogue, Oxford University Press, number 9780198287650.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hallegatte, Stephane, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Policy Research Working Paper Series 6047, The World Bank.
    2. Inoue, Hiroyasu & Todo, Yasuyuki, 2017. "Firm-level simulation of supply chain disruption triggered by actual and predicted earthquakes," MPRA Paper 82920, University Library of Munich, Germany, revised 22 Feb 2017.
    3. Henriet, Fanny & Hallegatte, Stephane, 2008. "Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach," Coalition Theory Network Working Papers 46657, Fondazione Eni Enrico Mattei (FEEM).
    4. Stéphane Hallegatte, 2014. "Modeling the Role of Inventories and Heterogeneity in the Assessment of the Economic Costs of Natural Disasters," Risk Analysis, John Wiley & Sons, vol. 34(1), pages 152-167, January.
    5. Ladley, Daniel, 2013. "Contagion and risk-sharing on the inter-bank market," Journal of Economic Dynamics and Control, Elsevier, vol. 37(7), pages 1384-1400.
    6. Vitali, Stefania & Battiston, Stefano & Gallegati, Mauro, 2016. "Financial fragility and distress propagation in a network of regions," Journal of Economic Dynamics and Control, Elsevier, vol. 62(C), pages 56-75.
    7. Hiroyasu Inoue & Yasuyuki Todo, 2019. "Propagation of negative shocks across nation-wide firm networks," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-17, March.
    8. Hiroyasu Inoue, 2021. "Propagation of International Supply-Chain Disruptions between Firms in a Country," JRFM, MDPI, vol. 14(10), pages 1-14, October.
    9. B. Coluzzi & M. Ghil & S. Hallegatte & G. Weisbuch, 2010. "Boolean delay equations on networks: An application to economic damage propagation," Papers 1003.0793, arXiv.org.
    10. Yasuyuki Todo & Kentaro Nakajima & Petr Matous, 2015. "How Do Supply Chain Networks Affect The Resilience Of Firms To Natural Disasters? Evidence From The Great East Japan Earthquake," Journal of Regional Science, Wiley Blackwell, vol. 55(2), pages 209-229, March.
    11. Anand, Kartik & Gai, Prasanna & Marsili, Matteo, 2012. "Rollover risk, network structure and systemic financial crises," Journal of Economic Dynamics and Control, Elsevier, vol. 36(8), pages 1088-1100.
    12. Ogura, Yoshiaki & Okui, Ryo & Saito, Yukiko Umeno, 2015. "Network-Motivated Lending Decisions," HIT-REFINED Working Paper Series 29, Institute of Economic Research, Hitotsubashi University.
    13. Iman Rahimi Aloughareh & Mohsen Ghafory Ashtiany & Kiarash Nasserasadi, 2016. "An Integrated Methodology For Regional Macroeconomic Loss Estimation Of Earthquake: A Case Study Of Tehran," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-24, September.
    14. Charles D. Brummitt & Kenan Huremović & Paolo Pin & Matthew H. Bonds & Fernando Vega-Redondo, 2017. "Contagious disruptions and complexity traps in economic development," Nature Human Behaviour, Nature, vol. 1(9), pages 665-672, September.
    15. Lenzu, Simone & Tedeschi, Gabriele, 2012. "Systemic risk on different interbank network topologies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(18), pages 4331-4341.
    16. Edirisinghe, Chanaka & Gupta, Aparna & Roth, Wendy, 2015. "Risk assessment based on the analysis of the impact of contagion flow," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 209-223.
    17. Wenzel, Lars & Wolf, André, 2013. "Protection against major catastrophes: An economic perspective," HWWI Research Papers 137, Hamburg Institute of International Economics (HWWI).
    18. Antoine Mandel & Vipin Veetil, 2020. "The Economic Cost of COVID Lockdowns: An Out-of-Equilibrium Analysis," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 431-451, October.
    19. Otto, C. & Willner, S.N. & Wenz, L. & Frieler, K. & Levermann, A., 2017. "Modeling loss-propagation in the global supply network: The dynamic agent-based model acclimate," Journal of Economic Dynamics and Control, Elsevier, vol. 83(C), pages 232-269.
    20. Stéphane Hallegatte, 2008. "An Adaptive Regional Input‐Output Model and its Application to the Assessment of the Economic Cost of Katrina," Risk Analysis, John Wiley & Sons, vol. 28(3), pages 779-799, June.

    More about this item

    Keywords

    Natural disasters; Economic impacts; Economic network;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:pseptp:hal-00716554. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Caroline Bauer (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.