INDIRECT ECONOMIC EFFECTS TRIGGERED BY CATASTROPHIC FLOOD EVENTS IN ALPINE REGIONS. C. Pfurtscheller / K. Kleewein

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1 INDIRECT ECONOMIC EFFECTS TRIGGERED BY CATASTROPHIC FLOOD EVENTS IN ALPINE REGIONS C. Pfurtscheller / K. Kleewein 18. Oktober 2010 IDRiM 2010, Vienna

2 agenda Intro Survey and empirics Triggers of indirect economic effects Improvements for CBA and entrepreneural risk management strategies / research gaps EU FP7:ConHaz - Costs of natural Hazards

3 Indirect economic effects interferences of the economic exchange of goods and services triggered by breakdowns of transport lines and critical production inputs (in contrast to business interruption) Stock and flow measurement / doublecounting problem (ROSE 2004) demystification of the measurement (see COCHRANE 2004) Scale-dependant methodology Broader perspective: indirect losses are 0! (MERZ et al. 2010) Macro: CGE-modells, econometric modells Meso: Regional I/O Analysis (HALLEGATTE 2008) Micro / meso: Bottum-up, de-aggegated data community-based measurement (ROSE & LIM 2002) CBA for mitigation measures Entrepreneural perspective: no systemic assessment of indirect effects (book-keeping, controlling, etc.)

4 Survey floods 2005 Floods 2005 in the Federal States of Tyrol and Vorarlberg, Austria 800 Mio. direct losses, 1000 affected structures Interrupted traffic network (short-term) decline of tourism Case study / survey: shortterm net-effects, no systemic losses (financial sector), n = 1.300, random sample identify and scale the drivers of indirect costs triggered by floods on a local and regional scale based on expertinterviews Thieken, Cammerer & Pfurtscheller (2010): in press

5 Economic structure Federal State of Tyrol and floods 2005 In general - alps: fragmented, export-orientated, tourism Tyrol: businesses, employees, 91% are SMBs GRP 22.6 bil., 70 % exports incl. services Tourism: 45 mio. overnight stays Floods affected companies 105 mio. direct losses

6 Preliminary results Every second company is flood-prone as a self-estimation Risk management measures as a proxy for company s size Adaptation / learning effects after the 2005-event:

7 Production, storage capacity

8 Winners of exogene shocks? In affected areas, short-term: Construction industry and trade, related businesses (haulage, community service providers, etc.) - clean-up, remove damages Mid-term construction industry, civil engineers - setting up new mitigation measures

9 Triggers of indirect effects incl. business interruption

10 Improvements for CBA and entrepreneural risk management, research gaps Sucessive identification of triggers of indirect effects on a local / regional scale Establishment of data basis combined with reg. I/O-analysis (municipial level?) practicability of methods (CBA) multihazard solutions (inudation, debris flows, landslides) Communication of possible indirect effects (public authorities, companies, chamber of commerce) Assessment of the single object suppliers, customers, stock, importance of manpower, etc. NOT ONLY: number of companies, employees Increase of stock, Diversification of suppliers / customers Substitution of transport network (alternative pathways)

11 ConHaz Coordination Action project funded by the EU 7th Framework Programme Floods, storms / coastal risks, droughts and alpine hazards cost assessment methods, research gaps and recommendations University of Innsbruck, Institute of Geography, clemens.pfurtscheller@uibk.ac.at