A General Equilibrium Assessment on a Compound Disaster in Northern Taiwan

We analyze the economic impact on key sectors of a compound disaster in Taiwan. While Taiwan has high-tech export-oriented industries such as semiconductors and electronic products, three out of four nuclear power plants are located in the at-risk areas close to its capital city with industrial agglomeration. We use a computable general equilibrium (CGE) model to simulate a compound disaster in northern Taiwan. We consider the individual disaster components of labor loss, capital loss, power crisis, and finally combine them to simulate a compound disaster comprehensively. The simulation results show that Taiwan’s key sectors such as semiconductor and electric equipment would be affected severely by capital and labor losses but not by the power crisis. This implies that no electric power allocation would be needed for these industries although we are often tempted to do so in emergencies.