ECONOMICS (Gordon, Moore, Richardson, Lave, Smith)
Our economic team has experience in the economic modeling of major disasters (Gordon, Moore, and Richardson at USC), cost-benefit analysis of major risk reduction decisions (Lave), and the impact of environmental changes on the behavior of economic agents (Smith).
We are modeling the costs of various terrorist attacks on structures and infrastructures and support the three applied case studies. To apply and expand our economic modeling capabilities, we will develop and launch several modeling projects.
- Southern California Planning Model (SCPM) is an integrated highway network-economic-spatial allocation model of the Los Angeles metropolitan area. The current version includes 47 economic sectors (the “USC Sectors,” easily translated to other U.S. industrial and commodity codes), the 3,191 TAZs of the greater Los Angeles five-county area, and 89,356 highway links. The latter include 647 HOV lane-miles. The model evaluates the spatial and sectoral economic consequences of terrorist threat scenarios affecting Southern California.
Figure 1. SCPM Data Flows and Calculations
Figure 1 summarizes our approach. Hypothetical or anticipated scenarios determine changes to infrastructure or structures by location. Based on the transportation network equilibrium costs and the trip production and attraction vectors determined in the model, we calibrate 38 separate spatial interaction models. These include nine flows involving people, and 29 classes of commodity flows. We estimate each of these matrices of inter-zonal flows separately in response to a common measure of network equilibrium costs. The structure of inter-zonal flows in each of the matrices influences network equilibrium costs. This baseline calibration requires iteration between the network assignment model and the set of gravity models. The end result is a matrix of equilibrium link costs consistent with a corresponding set of equilibrium trip interchange matrices for each flow. The resulting passenger and freight flows are used to estimate the spatial allocation of indirect and induced economic impacts (jobs) by sector. The results apply to local areas within the metropolitan region, and beyond.
SCPM has been utilized in research for USC’s Center for Risk and Economic Analysis of Terrorist Events (CREATE), for the National Science Foundation, and for various other agencies and groups. SCPM will be updated to incorporate better data and solution algorithms. In addition, it will be enhanced to include human casualties and endogenously determined rail freight shipments. At present, only highway freight shipments are endogenous to the model.
1. Gordon, P., J. E. Moore II, H. W. Richardson, and Q. Pan (2006) “The Costs of a Terrorist Attack on Terminal Island at the Twin Ports of Los Angeles and Long Beach,” in J. Haveman and H. Schatz (eds.) Protecting the Nation's Seaports: Balancing Security and Cost, San Francisco: Public Policy Institute of California, pp. 71-89.
2. Gordon, P., J.E. Moore II, H. W. Richardson, and Q. Pan (2005) "The Economic Impact of a Terrorist Attack on the Twin Ports of Los Angeles-Long Beach," in Gordon, P., H.W. Richardson, and J.E. Moore II (eds.) The Economic Impacts of Terrorist Attacks, Cheltenham, UK: Edward Elgar, pp. 262-289.
3. Cho, S., P. Gordon, J. E. Moore II, H. W. Richardson, M. Shinozuka, and S. E. Chang (2001) “Integrating Transportation Network and Regional Economic Models to Estimate the Costs of a Large Urban Earthquake,” Journal of Regional Science, 41(1), pp. 39-65
4. Jun, M.J. (1999) “An Integrated Metropolitan Model Incorporating Demographic-economic, Land-use and Transport Models,” Urban Studies, 36(8), pp. 1399-1408.
5. Richardson, H. W., P. Gordon, M.J. Jun, and M. Kim (1993) “Pride and Prejudice: the Economic and Racial Impacts of Growth Control in Pasadena,” Environment and Planning A, 25, pp. 987-1002.
Input-output models are among the most widely used economic impact models. They offer considerable sectoral detail along with computability. Yet, a limitation in most applications has been the difficulties encountered estimating the spatial detail of impacts. In contrast, NIEMO combines data from widely available 2001 IMPLAN input-output models with interregional trade flows based on the Commodity Flow Survey (CFS also for 2002), aggregated to 47 economic sectors (the “USC Sectors”, easily translated to other U.S. industrial and commodity codes) over 52 regions (50 States, Washington, D.C., and the Rest of the World). This results in a multiregional input-output matrix that provides almost 6 economic million [(52x47)2] multipliers.
The structure of NIEMO is based on two basic sets tables: industrial trade coefficients tables and state-level interindustry coefficients tables. Figure 2 describes an application to port closure. The interindustry tables present no serious problem because reliable data are available from IMPLAN at the state and industry levels. The trade tables by industry are challenging to construct because of incomplete information in the Commodity Flow Survey. However, incorporating this spatial information is important for two reasons. First, “all politics is local” and many policy makers are keenly interested in local impacts. Second, spatial aggregation often obscures local differences and presents net results that mask contrasts between losses in one area and possible offsetting gains in another.
Figure 2. NIEMO Modeling Process for Port Closure Impacts
1. Park, J. Y., P. Gordon, J. E. Moore II, and H. W. Richardson (2006) “Simulating The State-by-State Effects of Terrorist Attacks on Three Major U.S. Ports: Applying NIEMO (National Interstate Economic Model),” in H.W. Richardson, P. Gordon and J.E. Moore II (eds.), The Economic Costs and Consequences of Terrorism. Cheltenham: Edward Elgar (forthcoming).
2. Richardson, H. W., P. Gordon, J. E. Moore, II, S.J. Kim, J.Y. Park, and Q. Pan, (2006) “Tourism and Terrorism: The National and Interregional Economic Impacts of Attacks on Major U.S. Theme Parks,” in H.W. Richardson, P. Gordon and J.E. Moore II, eds., The Economic Costs and Consequences of Terrorism. Cheltenham: Edward Elgar (forthcoming).
3. Park, J.Y. (2006) “The Economic Impacts of a Dirty- Bomb Attack on the Los Angeles and Long Beach Port: Applying Supply-driven NIEMO,” Paper to be presented at 17th Annual Meeting of the Association of Collegiate Schools of Planning, Fort Worth, TX, USA, November 9-12.
4. Park, J.Y., C.K. Park, and S.J. Nam (2006) “The State-by-State Effects of Mad Cow Disease using a new MRIO model,” Paper to be presented at 2006 American Agricultural Economic Association (AAEA) Annual Meeting, Long Beach, CA, June 23-26.
5. Richardson, H. W., P. Gordon, J. E. Moore, II, J.Y. Park, and Q. Pan (2006) “The Economic Impacts of Terrorist Attacks on the Twin Ports of Los Angeles-Long Beach,” Berkeley Symposium on Real Estate, Catastrophic Risk, and Public Policy, Conference paper series, C06-006, University of California, Berkeley.
6. Park, J. Y. and P. Gordon (2005) “An Evaluation of Input-Output Aggregation Error Using a New MRIO Model” Paper presented at North American Meetings of the Regional Science Association International 52nd Annual Conference, Riviera Hotel & Casino, Las Vegas, NV, USA, November 10-12.
7. Park, J. Y., P. Gordon, J. E. Moore II, and H. W. Richardson (2004) “Construction of a U.S. Multiregional Input Output Model Using IMPLAN,” Paper presented at 2004 National IMPLAN User’s Conference, Shepherdstown, West Virginia, USA, October 6-8.