2006 Intermediate Input-Output Meeting

Analysis of the Economic Impacts of a Natural Disaster Using Interregional Input-Output
Tables for the Affected Region: A Case Study of the Tokai Flood of 2000 in Japan
Yoshifumi Ishikawa 1,

Nanan University

Toshitaka Katada 2, Gunma University

1.

Introduction

The impacts of natural disasters such as earthquakes and floods extend to other regions throughinterregional trade, and they economically impact not only the affected region but also other regions.
Furthermore, the economic impacts of unscheduled events stem not only from damages and losses
but also from recovery and reconstruction activities.
In Japan, the Tokai flood disaster struck Nagoya City and its surrounding municipalities in 2000.
The disaster brought the factories in the directly damaged region to a standstill and had serious
economic impacts. For instance, the closure of mills in the directly damaged region affected factories
in other regions because the supply of essential parts was discontinued.
The impacts of the damage spread over time and economically affected the directly damaged
and other regions in the short and long run. In other words, the impacts of disasters include not only
the negative effects of damages and losses but also the positive economic effects due to recovery andreconstruction.
Many studies have conducted Regional Input-Output analysis to measure the economic impacts
of disasters. Various studies assessing the direct and indirect damages inflicted by an event wereconducted by using a previously prepared input-output table. However, due to the time lag, theanalysis using these tables does not precisely evaluate the economic impacts. Therefore, it isnecessary to investigate the dynamic process of the paths of the impacts and the recovery process
following a disaster.
In this study, using an interregional input-output table for the directly affected region and theother regions, we propose a framework for estimating the economic impacts of actual natural
disasters post-occurrence. Further, this study presents an ex-post analysis of the economic impacts of
the Tokai flood that occurred in Japan in 2000. For this purpose, we constructed interregional
input-output tables for both the affected region and the other regions.

1

Faculty of Policy Studies, Nanzan University, E-mail: yishi@ps.nanzan-u.ac.jp

2

Development of Civil Engineering, Gunma University, E-mail: t-katada@ce.gunma-u.ac.jp1

2006 Intermediate Input-Output Meeting

2.

Method of Impact Analysis of Natural Disasters Using Interregional Input-output
tablesIn this study, we focus on the ex-post analysis after the event has occurred. Therefore, inorder to assess the regional economic impacts due to unexpected events we need to gain anunderstanding of input-output structure for both before and after the occurrence of a natural disaster.
In Japan, we can use many regional input-output tables. The simplest method to measure theeconomic impacts of a natural disaster is probably the input-output modeling using these previously
prepared regional input-output tables. However, the regional divisions in the prepared table do notcorrespond to the directly damaged regions. Further, most regional input-output tables are notinterregional but intraregional. Therefore, an analysis performed using these tables would not take
into consideration the impacts on the other regions. Moreover, we are unable to obtain a regional
input-output table that is indicative of the economic situation during the stagnant period soon after
the occurrence of the event. Factories would have switched vendors from those in the affected region
to those in other regions. We attempted to gain an understanding of interregional input-output
structure for before and after the occurrence of the event for the affected and other regions.
It is generally recognized that there are three approaches to constructing interregional tables:
survey, non-survey, and hybrid. In order to accurately estimate economic impacts, the survey
approach of constructing regional input-output tables was adopted in this study. The interregional
trade patterns of an economy change before and after disaster. Since we aim to gauge the economic
effects of a natural disaster after its occurrence, a detailed survey and considerable efforts are needed
to gauge the interregional flow in terms of goods.
We consider three periods—the ordinary activity period, stagnant period after an event, andrecovery period. Figure 1 shows the image of the time series variation in the economic activity of theaffected region and the other regions.
In the wake of a natural disaster, many establishments switch business connections to otherregions because of the stagnant activity of factories and severed lifelines in the affected regions.
Bi-region interregional input-output tables for the ordinary activity period and the stagnant period
after the occurrence of the event make it possible to analyze economic effects on each region.
Therefore, first, we capture the bi-region interregional input-output structure during theordinary activity period by constructing an input-output table. Second, we calculate the interregional
input coefficients for the ordinary activity, stagnant, and recovery periods. The comparison of thesethree interregional input coefficients indicates the change in business relationships.
The changes in the following three types of final demands due to natural disasters haveeconomic impacts. Therefore, we need to estimate the economic impacts of these three types of final

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2006 Intermediate Input-Output Meeting

demand changes:① Impacts of ordinary final demands of each regional economy during the stagnant period after theoccurrence of an event. This impact is associated with a change in the interregional tradepattern② Impacts of private sector demand for factory equipment and domestic articles in the affected
region at the recovery stage③ Impacts due to reconstruction demand in the affected region

Among these, the impacts of ordinary final demand are assessed based on the difference inproduction that is estimated using individual interregional input-output models for the ordinary
activity and stagnant periods.

Affected region

Other regions

Productive capacity

stagnant

stagnant

stagnant

stagnant

Outputrecoveryordinary

recoveryordinary
stagnant

stagnant

Figure.1

recoveryordinary

recoveryordinary

recoveryordinary

recoveryordinary

Final demand

Image of Changes in Productive Capacity, Final Demand and Output over TimeIn this study, we compiled Chenery-Moses type bi-region interregional input-output tables.
Therefore, the analysis of economic impacts of the three types of final demand changes is assessedusing the following formula:3

2006 Intermediate Input-Output Meeting

−1

h
h
⎤
⎡
X = ⎢ I−⎛⎜ A gh−M A＊ ⎞⎟⎥ ⎡ F gh D−M FD＊＋E h ⎤
⎥⎦
⎢
⎠⎦ ⎣
⎣ ⎝
h

M h＝M

h

(A X ＋F )
＊

h

＊
D

⎛ A11
⎜
⎜
O
＊ ⎜
A =⎜
A gh
⎜
⎜⎜
⎝ 0

0 ⎞⎟
⎟
⎟
⎟
⎟
O
⎟
A nn ⎟⎠(1)⎡ FD11 ⎤⎢⎥⎢ M ⎥F ＊＝⎢ FDgh ⎥
⎢
⎥
⎢ M ⎥
⎢ F nn ⎥⎣ D ⎦Agh： matrix of input coefficient from region g to h
Xh ：total output vector of the region h
FghD：final demand vector of region g to h
Eh：export vector for the region h
Mh：import vector for the region hg,h： region g and region h

3.

Ex-post Analysis of the Regional Economic Impacts of the 2000 Tokai Flood Disasterin Japan(1) Outline of the Tokai flood disaster of 2000 in Japan

Aichi prefecture received record heavy rainfall from September 11 to 12, 2000. The autumn
rain front, which had stagnated near Honshu, increased its force as a result of the influence of
typhoon No.14, causing heavy rainfall from the Tokai region through to the Shikoku region. The
Nagoya Meteorological Observatory recorded a total precipitation of 567 mm and a maximum
hourly precipitation of 93 mm. At many of the monitored points in the two rivers, the water levelexceeded the expected level and signs of the possible collapse of banks were observed in many
places.
Eventually, the Shinkawa riverbank collapsed, and together with inundations that were alreadywidespread within the sheltered areas, caused extended and deep inundations over approximately
6,000 houses. Many of these houses suffered over floor flooding, which caused high amounts ofproperty loss.
It was reported that due to the damage caused by the Tokai heavy rain, the death toll was 10,42006 Intermediate Input-Output Meeting

recommendations were made for providing refuge facilities for about 580,000 people, the number ofdamaged houses in which the flooding reached above the floor level was 23,896, and the number ofdamaged houses in which the flooding remained below the floor level was 39,544.
The studied areas are the Shonai and Shin river basins, located approximately in the centerof Japan, including the Nagoya city area—5th largest city in Japan with a population of about 2.5
million. These, two rivers that flow through densely populated areas and into the Pacific Ocean are
typical city-type rivers in Japan.
The Tokai flood disaster is an example of typical urban flood hazards that have recently
been increasing in Japan. This increase is due to the development of flood planes, dense land use,less water penetration due to the construction of pavements, and low capability of keeping water
upstream in the mountains.

(2) The disaster affected region and sector classification

The region directly hit by the Tokai flood is shown in figure 2—the upper Shinkawa river
basin and the northern part of Nagoya city and Kasugai city. The sector number of the input-output
tables compiled in this study is 21.

Figure.2 Affected Region(The upper Shinkawa river basin, the southern part of Nagoya city

5and Kasugai city）

2006 Intermediate Input-Output Meeting(3) Industrial structure of the affected region

Production in the affected region —based on the interregional input-output table in theordinal period— amounts to approximately 10 trillion 788 billion yen. Of this amount, the affected
region accounts for approximately 15% of Aichi prefecture. Public administration and service andtransport equipment have a high rate of production. Furthermore, textiles, machinery, pulp, paper,
wooden products, and electronics account for a high share in Aichi prefecture.

Table 1. Outputs by Sector in the Affected Region

Affected Region

million yen
Affected Region／Aichi

Agriculture, forestry and fishery

26,462

5%

Foods

322,065

14%

Textile products

380,333

39%

Pulp, paper and wooden products

340,49627%

Chemical products

123,340

12%

Plastic products

232,402

17%

Ceramic, stone and clay products

73,416

8%

Iron and steel

305,435

10%

Metal products

228,318

18%

General machinery

862,737

28%

Electrical machinery

701,54827%

1,228,340

9%Precision instruments

14,599

7%

Miscellaneous manufacturing
products

304,139

16%

Construction

909,988

20%

Electricity, gas and heat supply

285,635

15%

Commerce

725,229

10%

Financial and insuranceReal
estateTransportCommunication andbroadcasting

760,530

15%

877,756

18%

Public administration and servies

2,009,831

17%

Others75,36615%

Total

10,787,966

15%Transportation equipment

62006 Intermediate Input-Output Meeting(4) Construction of input-output tables for the affected region and the other region

First, in order to construct input-output tables for the affected region, we carried out aquestionnaire survey and acquired data on the regional export direction for the ordinary, stagnant,and post-recovery periods. Second, we prepared intraregional input-output tables for the affected
region using certain regional economic statistics and the results of the questionnaire survey. Also, inorder to compile intraregional input-output tables for the rest of Japan that was not affected, we used
the input-output tables that were constructed as intraregional input-output tables and other
input-output tables for the entire country. Further, bi-region interregional input-output tables werecompiled using interregional trade coefficients that were estimated using intraregional input-output
tables and the results of the questionnaire survey.

(5) Outline of the questionnaire survey

In order to analyze the characteristic features of damage to establishment, we performed asample survey of selected establishments. This survey was designed to maximize the response rate to
the 5000 mailed questionnaires. A total of 743 usable questionnaires were returned, indicating an
overall response rate of approximately 15%. For each establishment surveyed, the respondents were
essentially requested to estimate three aspects: (1) the value of total output; (2) the proportion ofeach sale and purchase made within and outside the affected region both before and after thedisaster; (3) the damage caused to the establishment; and (4) the factors that affected the activity ofthe establishment.

(6) The characteristic features of the damage to establishments

1)The duration of stagnant and recovery periods
First, we investigated the duration of stagnant and recovery periods after the event. In thecase of the upper Shinkawa river basin, which experienced significant damage, the duration ofstagnant and recovery periods was 19 and 37 days, respectively. For the southern part of Nagoya,
which had a short recovery period, the number of days until recovery was about 20.
The reason for the long delay until recovery commenced was that the establishments could
not use inundated factory equipments, and thus spent a considerable amount of time in cleaning theequipment for use.

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2006 Intermediate Input-Output Meeting

2)The difference in output before and after the event
Next, we observed the difference in output before and after the event. In the upper
Shinkawa river basin, there was also a decline in the sales of many establishments. Further, theoutput during the stagnant period is approximately 58% of that during the ordinary period; the output
after the recovery period is approximately 83% of that during the ordinary period.

3)Changes in sales in the upper Shinkawa river basin, the southern part of Nagoya, and Kasugai city
after the flood
Figure 3 shows the changes in the sales of the upper Shinkawa river basin, the southernpart of Nagoya, and Kasugai city. As is evident from this figure, in the upper Sinkawa river basin,
the disaster caused the most significant decrease in sales after the event because the region had
experienced significant damage. In the southern part of Nagoya, the ratio of the affected
establishments to the total number of establishments and the ratio of the affected houses to the total
number of houses was the highest, after the upper Shinkawa river basin. The slump in the sales inthis region is approximately the same as that in the upper Sinkawa river basin but the durations of
the stagnant and recovery periods are shorter than those in the upper Shinkawa river basin.

(The Upper Shinkawa River Basin)

Output
１００％
83.3％
57.5％

Ordinary

Recovery(37days)

Stagnant(19days)(The Southern Part of Nagoya City)

Output
１００％
87.9％
60.4%

Ordinary Stagnant Recovery(8days) (12days)

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2006 Intermediate Input-Output Meeting(Kasugai City)

Output
１００％
84.8％
70.6％

Ordinary

Figure.3

Recovery(25days)

Stagnant(16days)

The Changes in Output in the Upper Shinkawa River Basin, the Southern Part of Nagoya
City and Kasugai City

(7) Analysis of changes of interregional trade pattern

The ratio of regional imports of products and services from other regions for most
sectors during the stagnant period is higher than that during the ordinary activity period. This
indicates that several establishments in the affected region were unable to acquire materials andother products.Subsequently, the ratio of the input of materials and other products from other regions
increased, thus decreasing the self sufficiency ratio in the affected region lowering the output fromthe affected region during the stagnant period. Table 2 lists the ratios of intermediate input of theaffected region to that of other regions.

92006 Intermediate Input-Output Meeting

Table 2.

The Changes of Self Sufficiency Ratio in the Affected Region
Ordinary

Stagnant

Recovery

Agriculture, forestry andfishery

-

-2.0%

0.0%

Foods

-

-2.1%

-0.1%

Textile products

-

-2.2%

-1.2%

Pulp, paper and wooden
products

-

6.0%

1.1%

Chemical products

-

-1.1%

0.2%

Plastic products

-

-4.0%

2.3%

Ceramic, stone and clay
products

-

-1.5%

0.2%

Iron and steel

-

-3.0%

-0.9%

Metal products

-

-3.4%

0.7%

General machinery

-

-3.3%

-1.0%

Electrical machinery

-

-8.8%

-1.3%

Transportation equipment

-

-9.0%

0.3%

Precision instruments

-

-3.8%

0.0%

Miscellaneous
manufacturing products

-

-0.6%

0.7%

Construction

-

-2.5%

2.0%

Electricity, gas and heat
supply

-

-2.4%

-0.7%

Commerce

-

-3.0%

0.5%

-

-0.9%

0.3%

-

-3.3%

0.1%

-

-2.7%

-0.4%

Others

-

1.2%

0.6%

Average

-

-2.5%

0.2%

Financial andinsuranceReal estateTransportCommunication andbroadcasting
Public administration andservies(8) Economic impacts of the 2000 Tokai flood disaster1)Economic impacts of private consumption during the stagnant period
Private consumption during the stagnant period amounts to 224 billion yen for the affected
region and 22 trillion yen for the rest of Japan. The final demand arises not only in the stagnant
period but also after the event. The changes in interregional trade patterns differ in production ineach region. In the affected region, the decrease in production amounts to approximately 7.4 billion
yen.

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2006 Intermediate Input-Output Meeting

Table 3. Economic Impacts of the 2000 Tokai Flood Disaster
Ordinary
Agriculture, forestry and fishery
Foods
Textile products
Pulp, paper and wooden products
Chemical products
Plastic products
Ceramic, stone and clay products
Iron and steel
Metal products
General machinery
Electrical machineryTransportation equipment
Precision instruments
Miscellaneous manufacturing products
Construction
Electricity, gas and heat supply
Commerce
Financial and insuranceReal estateTransportCommunication and broadcastin
Public administration and servies
Others
Total

Stagnant

million yen
Difference

1,842

1,819

-22

19,195
19,837
10,084
4,506
7,601
889
4,417
3,663
3,562
14,08237,964164
12,903
2,582
13,41637,412
51,841
42,67471,6592,856
363,150

18,574
19,308
10,157
4,495
7,499
867
4,354
3,625
3,545
10,72836,549164
12,651
2,562
13,38437,272
51,76842,30571,276
2,814
355,715

-621
-529
72
-12
-102
-22
-63
-39
-17
-3,354-1,415
0
-252
-20
-32
-141
-73
-369
-384
-42
-7,4352) Economic impacts of emergency operation and equipment recovery on establishments
The cost of emergency operations is 35 billion yen, and the cost of equipment repair andreplacement amounts to 413 billion yen. A major portion of the emergency operation cost is the costfor cleaning, etc. The final demand for emergency operation brings about the production inducement
effect, which is valued at approximately 98 billion yen for Japan as a whole, inclusive of the affected
region, and approximately 76 billion yen for the affected region only. The final demand forequipment repair and replacement brings about the production inducement effect, which is valued at
approximately 882 billion yen for Japan as a whole, inclusive of the affected region, andapproximately 565 billion yen for the affected region only.

3) Natural disaster relief expenditure
Natural disaster relief expenditure amounts to 8.4 billion yen, and the demand increase in theaffected region results in the production inducement effect, which is valued at approximately 11
billion yen for the affected region and 15 billion yen for the entire country.

112006 Intermediate Input-Output Meeting

4.

Conclusions

The results of this study are as follows:1)We presented a framework for the analysis of economic impacts of the flood disaster. Our method
can assess the economic impacts on the affected region and the rest of the country.
2) We assessed the economic impacts of the 2000 Tokai flood disaster using the method that ispresented in this study. First, the industrial structure in the affected region and the changes in theinterregional trade pattern are analyzed using bi-region interregional input-output tables. There
are some industries that exhibit a decrease in the self-sufficiency ratio. Further, the three types offinal demands bring about the production inducement effect in the affected region, which is 2–3%of the outputs of the entire country.

Refferences

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International Conference on Input-Output Techniques, 2002.
2) Stephanie Chang, Structural Change in Urban Economies: Recovery and Long-Term Impacts in
the 1995 Kobe Earthquake, Kokumin-Keizai-Zassi, Vol.183,No.1, 2001.
3) Mitsuo Yamada, “An Interregional Input-Output Table of Mie Prefecture, Japan: Estimation andApplications”, Journal of Applied Input-Output Analysis, Vol. 3, 1996., pp.64- 79.
4) Robert A. Chase,Philip J. Bourque and Richard S. Conway, Jr., “THE 1987 WASHINGTONSTATE INPUT-OUTPUT STUDY”,1993.
5) Heejoo Ham, Tschangho John Kim and david Boyce: Assessment of economic impacts from
unexpected events with an interregional commodity flow and multimodal transportation networkmodel, Transprtation Research Part A,39, pp.849-860, 2005.

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