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This book presents an evaluation of the impacts of megathrust earthquakes and tsunamis on regional economies and subsequent reconstruction, as well as regional revitalization by the spatial economic model and dynamic macro and regional computable general equilibrium (CGE) models. The cases examined are the Great East Japan Earthquake and the Indian Ocean Tsunami. The study constructs three models of these megathrust earthquakes and the associated tsunami. In the first model, the regional CGE model is proposed with a database comprising the two-regional social accounting matrix for 2005 between the region comprising four disaster-affected prefectures of Japan and the non-disaster region. For the recursive dynamic regional CGE model, the model that expanded and improved the dynamic two-regional CGE model to reflect the incomplete employment conditions and the aging society is used to analyze the impacts of an earthquake and the construction of industrial clusters. In the second model, the interregional input–output model is proposed in order to analyze the impacts of the earthquake and rapid population decline and construction of a biogas electricity power plant. In the third model, a new economic geography (NEG) model is proposed, consisting of the 47 prefectures of Japan in order to investigate the impacts of the Great East Japan and Nankai megathrust earthquakes and the associated tsunami and to consider how they change the regional economies of Japan. Using these three models, the impacts of megathrust earthquakes and tsunamis on regional economies and reconstruction and on regional revitalization are evaluated.

Inhaltsverzeichnis

Frontmatter

Chapter 1. A Spatial and Economic Analysis of Megathrust Earthquakes

Abstract
The Great East Japan Earthquake, which struck on March 11, 2011, had a massive economic impact, primarily on the affected areas in Japan. The Indian Ocean Tsunami hit Aceh and Nias, Indonesia, on December 26, 2004 and destroyed life and infrastructure within 10 km of the coastline in north and western Aceh. In this book, we examine the economic and human damage inflicted by megathrust earthquakes and tsunamis and analyze the economic effects of policies for reconstruction and regional renewal after such catastrophes, using a spatial and economic model. The contents of this book are as follows: Part I, Impacts of the Great East Japan Earthquake, is composed of three chapters that form a foundation on which further earthquake research can be based. Part II, Reconstruction and Regional Renewal after the Great East Japan Earthquake, focuses on reconstruction and regional renewal after the Great East Japan Earthquake amid a declining Japanese population, using reconstruction budgets and industrial clusters. Part III analyzes the impact and reconstruction after the Great East Japan Earthquake, in a depopulating society, as summarized in Parts I and II. Part III evaluates regional impacts of megathrust earthquakes and tsunamis, such as the Great East Japan Earthquake, the Nankai Megathrust Earthquake, the Tokai earthquake in Japan, and the Indian Ocean Tsunami in Asia.
Suminori Tokunaga

Impacts of the Great East Japan Earthquake

Frontmatter

Chapter 2. Economic Analysis of Regional Renewal and Recovery from the Great East Japan Earthquake

Abstract
The Great East Japan Earthquake, which struck on March 11, 2011, had a massive economic impact, primarily on the affected areas in Japan. In this chapter, we examine the economic and human damage inflicted on Iwate, Miyagi, Fukushima, and Ibaraki Prefectures by the Great East Japan Earthquake, as well as the current situation of industrial recovery, based on several statistical sources and a geographically weighted regression (GWR) model. In the latter part of this chapter, we will show the extent of fiscal transfers to date from the government for reconstruction and renewal of stricken areas and analyze the economic effect of the formation of new industrial clusters for reconstruction and renewal on these areas using a static two-regional computable general equilibrium (2SCGE) model. Our findings are as follows: (1) if production subsidies to support industries form new industry clusters, positive effects on regional economies could appear in the disaster regions; however, these impacts are weak and (2) formation of new industry clusters with productivity improvement has a positive effect on real gross regional product (GRP) and economic welfare in these regions, reducing the economic welfare gap between disaster and non-disaster regions.
Suminori Tokunaga, Maria Ikegawa, Mitsuru Okiyama

Chapter 3. Impact of the Great East Japan Earthquake on Production Loss Using an Inter-Regional Social Accounting Matrix

Abstract
Using an inter-regional social accounting matrix, this chapter estimates the magnitude of production losses in both the disaster-affected and disaster-unaffected regions in Japan caused by production damage to agriculture and fisheries and by the loss of capital stock to the manufacturing industry. In addition, we also examine the cost-effectiveness of recovery support by comparing the initial production loss with that 1 or 2 years after the earthquake. Our estimates show that (1) the production loss caused by damages to agriculture and fisheries were 655.7 billion yen in the disaster-affected region and 2.69 trillion yen in the disaster-unaffected region; (2) the production losses caused by the loss of capital stock to the manufacturing industry were 937.2 billion yen in Fukushima Prefecture and 3.132 trillion yen in the other three disaster-affected prefectures (amounting to 5.9% and 6.0%, respectively, of the gross production value in the economic activity sector in 2005); and (3) 2 years after the disaster, the production loss in the disaster-affected region reduced by 311.4 billion yen, owing to the 2 years’ worth of recovery support for agriculture and fisheries, thereby confirming the cost-effectiveness of this support. However, these estimations are based on the multiplier effect, on the assumption that the halt in production activities caused by the damage persists for 1 year.
Mitsuru Okiyama

Chapter 4. Analysis of Supply Chain Disruptions from the Great East Japan Earthquake in the Automotive Industry and Electronic Parts/Devices

Abstract
This chapter constructs a two-region computable general equilibrium (2SCGE) model for the regions affected and not affected by the Great East Japan Earthquake of 2011. Using this model, we simulate negative supply shocks for both the upper-level sectors between regions and the lower-level sectors within the regions. Our results can be summarized as follows: (1) For negative supply shocks in the upper-level sectors across regions, production of automotive parts in the affected region could decline by as much as two times and still not have much of a negative effect on automotive assembly and production of automotive parts in other regions, if those parts are of commodity-grade. (2) For negative supply shocks in lower-level sectors within each region, to the extent that raw materials and intermediate goods produced by the manufacturing sector in the lower portion of the automotive production pyramid in the affected regions are difficult to source from non-affected regions; the more production in that industry drops, the greater is the negative effect on production of automotive parts and automobile production in the affected regions. From these results, we can derive the following implications: First, the automotive industry clusters in the affected region are inevitable, given the number of automotive parts. However, to construct a production pyramid structure, and from the standpoint of managing the risks from natural disasters, the pyramid must be completely formed while also being flexible across regions. This is another reason that it is preferable to avoid parts which can only be sourced from the same region and have even raw materials and intermediate goods be commodity-grade and substitutable from other regions, supplied by manufacturers in the lower portion of the production pyramid in the same region. Second, in addition, industrial promotion measures are required to aid the formation of such automotive industry clusters. For this purpose, one should consider utilizing the fiscal measures currently being undertaken for the affected regions.
Suminori Tokunaga, Mitsuru Okiyama

Reconstruction and Regional Renewal After the Great East Japan Earthquake

Frontmatter

Chapter 5. Economic Analysis of Fiscal Measures for Reconstructing the Tohoku Region After the Great East Japan Earthquake: Using a Dynamic Two-Regional CGE Model

Abstract
This chapter measures the economic impact of the reconstruction budget and illustrates the transition of the regional economies in the disaster-affected region amid a declining population using a recursive dynamic regional CGE model. Our findings are as follows: Firstly, even if the Great East Japan Earthquake had not occurred, the disaster-affected region would have experienced weaker growth in its sub-regional economies owing to the impact of a declining population. Secondly, the fiscal measures in the intensive reconstruction period contribute toward recovering the real Gross Regional Product (GRP) of the disaster-affected region, which slumped following the Great East Japan Earthquake. But, the real GRP of the disaster-affected region begins to move downward after 2018. However, the fiscal measures would slow down the pace of curtailment of the regional economies in the disaster-affected region compared with the scenario without fiscal measures. Third, it is advisable that the government should provide fiscal measures to the disaster-affected region after the intensive reconstruction period by adopting a different form of reconstruction budget, that is, by revising the distribution ratios of the local allocation tax grants. However, this measure alone would not allow the regional economy in the disaster-affected region to recover and exceed the level prior to the earthquake. In order to realize sustained economic growth, it is necessary to take other measures after the intensive reconstruction period, such as productivity improvements in each industry located within the disaster-affected region, using fiscal transfers.
Mitsuru Okiyama, Suminori Tokunaga

Chapter 6. Measuring Economic Gains from New Food and Automobile Industry Clusters with Coagglomeration in the Tohoku Region

Abstract
In this chapter, we will take the concepts of Porter’s (1998, 2000) clusters and present an analysis of the feasibility of ongoing economic development in disaster regions, utilizing two new industry cluster models. The two clusters are the automobile industry, which targets the entire disaster region and where innovation comes from coagglomeration with different industries in megaregions, and the food industry, which, focusing on leveraging local resources, targets individual disaster-struck prefectures. This study applies a dynamic two-regional computable general equilibrium (D2SCGE) model, constructed in Chap. 5, assuming Scenario C (continuation of fiscal support for reconstruction on the basis of a new approach in a 5-year construction period from 2016 to 2020, following the intensive reconstruction period) as the base scenario. We constructed scenarios for each of these two clusters and evaluated the economic effects of each new industry cluster on disaster regions. A simulation analysis of scenarios for these two new clusters with positive and higher productivity in the coagglomerated industries reveals the following two effects: (i) economies of agglomeration from vertical and horizontal coagglomeration boost the real Gross regional Product (GRP) and productivity at the macro level when the two new industry clusters are formed jointly rather than separately and (ii) the clusters contribute to long-term, sustained growth in disaster region economies, thus reducing the gap between their growth and that of other regional economies. This can be interpreted to mean that the usual policies adopted, such as subsidies and corporate tax cuts, are unable to counteract economic stagnation resulting from sharp population decline in disaster regions. It also suggests that agglomeration externalities, evidenced by improved productivity in the formation of new food/automobile industry clusters, can offer sustained economic development in disaster regions.
Suminori Tokunaga, Mitsuru Okiyama

Chapter 7. Production Recovery of Fishery and Seafood Manufacturing After the Disaster in Japan: Economic Evaluation Using Dynamic CGE Model

Abstract
The purpose of this chapter is to evaluate the economic effects of the recovery of fishery and seafood manufacturing after the disaster in Japan under depopulation by employing a dynamic Computable General Equilibrium (CGE) model. We confirmed a clear contrast between the production recovery of seafood manufacturers in Iwate and Miyagi Prefectures after the Great East Japanese Earthquake (GEJE) of 2011. The economic evaluation involves setting up simulation scenarios based on actual recovery evidence after GEJE. The results of five simulations indicated the following five points. (1) The disaster accelerated problems caused by depopulation. (2) Prompt capital restoration and production recovery contributed to shortening the period of output loss. (3) The degree of output recovery of the downstream industry was faster than that of the upstream industry. (4) No scenario based on GEJE evidence was sufficient to reach base scenario without disaster. (5) Stepwise production recoveries contributed to increases not only in specific industries but also economic welfare in the long term.
Yuko Akune

Chapter 8. Economic Ripple Effects of a Biogas Electricity Power Plant as Part of Earthquake Disaster Restoration in the Coastal Area of Iwate Prefecture

Abstract
The coastal area of Iwate Prefecture was seriously damaged by the Great East Japan Earthquake in 2011, and the revitalization of this region is an important issue in Japan. This chapter aims to estimate the input–output tables of this region before and after the earthquake and to use these tables to show the impacts of the earthquake and the impacts of a particular revitalization measure: the construction of a biogas electricity power plant. The results showed several distinct features. First, value-added production in 2011 was higher than the previous year because of recovery investment, but both intermediate inputs and the total production decreased. This occurred because the ratio of value-added production in the construction sector was higher than in other industries that were seriously damaged by the earthquake. Second, investment demand increased in 2011 and 2012, but the intermediate inputs and private and public consumption decreased because of the earthquake. The power-of-dispersion coefficients and production-inducement coefficients were slightly changed by the earthquake, but the increasing rate of induced production was low after the earthquake. Third, the multiplier value of induced production for the construction of a biogas electricity power plant would have been 0.64, if it had been constructed before the earthquake. However, that value after the earthquake was 0.17 because industrial linkage was damaged. Compared to the conventional electricity sector, the biogas electricity generation sector induced more production because the import rate of this sector was zero and most induced demand occurred within the region. Therefore, a biogas electricity power plant can contribute to the revitalization of a regional economy although the electricity generation capacity is small.
Yoji Kunimitsu

Evaluating Regional Impacts of Megathrust Earthquakes and Tsunamis

Frontmatter

Chapter 9. Economic Impacts of Population Decline Due to the Great East Japan Earthquake: An Inter-regional Input–Output Approach

Abstract
The Great Earthquake of March 11, 2011, significantly damaged the Tohoku region in Japan. Particularly, Fukushima Prefecture is still suffering from the impacts of the Great Earthquake and the nuclear power plant accident and the consequent evacuation of numerous people. It is considered that the population decline due to deaths, those declared missing, and evacuation has a negative impact on the regional economy through a decline in consumer demand. Therefore, using a 47-region inter-regional input–output table at prefecture level, we analyzed the economic impacts of the population decline for the past 5 years after the Great Earthquake. Consequently, it was observed that the impact was spread across the country. In particular, while the amount of production in the Tohoku region, including Fukushima, decreased, that of the Kanto region, including Tokyo, increased because many evacuees moved from the three affected prefectures and then became consumers in their new region. In addition, it is considered that the population decline will continue in the affected area in the long term. Therefore, based on population projections that consider the impact of the earthquake, we analyzed its long-term economic impacts. Consequently, it is shown that in the worst case, production in Fukushima in 2030 will decline by 15.4% compared with 2010. Thus, there is concern that the population decline in affected regions, such as Fukushima, will continue in the long term, and the regional economy will decline.
Yoshifumi Ishikawa

Chapter 10. An NEG Analysis of Megathrust Earthquakes in Japan

Abstract
This chapter investigates the impact of megathrust earthquakes on Japanese regional structure. Even after the Great East Japan Earthquake in 2011, there are serious concerns about predicted earthquakes in the near future; for instance, Tokyo Metropolitan Area (M. A.) earthquakes (expected to occur just in Tokyo M.A.), Tokai earthquakes (expected to occur in the area facing the Pacific Ocean on the west side of Tokyo M.A.), and Nankai megathrust earthquake (expected to occur in the area facing the Pacific Ocean on the west side of Kansai M.A.). In this chapter, we focus on the Great East Japan Earthquake and the Nankai megathrust earthquakes and the associated tsunami and consider how they changed the regional economies of Japan. Constructing an NEG model composed of the 47 prefectures of Japan, simulation results show that the predicted labor distribution approaches the actual distribution and as transportation costs decrease, labor distribution changes from dispersion to agglomeration in the metropolitan areas and then to re-dispersion in rural areas. In addition, adapting the damage data of megathrust earthquakes to this model, we predict the impact of the Great East Japan Earthquake and a Nankai megathrust earthquake on the regional potential and labor distribution among the prefectures. The simulation result of a Nankai megathrust earthquake predicts that the indirect utility levels in the affected prefectures fall by 1%, and the resulting outflow of refugees reduces the prefectural population by 3% in the worst case.
Ryusuke Ihara

Chapter 11. Evaluating Dynamic, Regional, and Economic Impacts of the Tokai Earthquake

Abstract
Natural disasters result in economic losses. In this study, a dynamic spatial computable general equilibrium model is constructed to investigate the negative economic impacts of an earthquake. In our model, Japan is subdivided into 47 regions, which are all connected by transportation networks. The model is of a decentralized economy with utility-maximizing consumers and value-maximizing firms in a dynamic context. The model embodies both spatial and dynamic aspects, i.e., commodity flows among regions and the dynamics of regional investments. The model is calibrated for the 47 regions’ economies using a multi-regional input–output table for Japan. We estimate the impacts of a hypothetical earthquake, which is expected to occur in the near future, on the regional economy (taking the Tokai region of Japan as a case study). The simulation results show both dynamic and spatial economic impacts before and after an earthquake. This study suggests that the economic impacts of such a disaster should be evaluated based on both ex-ante and ex-post criteria.
Hiroyuki Shibusawa

Chapter 12. Reconstruction and Rehabilitation After Large-Scale Natural Disasters: Lessons from the Indian Ocean Tsunami in Aceh and Nias, Indonesia

Abstract
The Indian Ocean Tsunami hit Aceh and Nias, Indonesia, on the morning of December 26, 2004. The giant wave destroyed all life and infrastructure within 10 km of the coastline in north and western Aceh, which then was a zone of armed conflict and all islands offshore. The death toll approached 167,000 people, with 128,000 missing and 811,000 internally displaced. This chapter analyses the impact of this huge natural disaster in a conflict zone. It documents the international response, the unexpectedly significant roles of NGOs on the Aceh and Nias economies and development in general, and the process of reconstructing and rehabilitating these areas. The reconstruction has been deemed successful. Among the important reasons for this success is that the Indonesian government wisely allowed local communities, leaders, and NGOs to participate in developing the master plan to reconstruct Aceh and Nias. Also, establishing the Badan Rehabilitasi dan Rekonstruksi Aceh-Nias to coordinate the reconstruction and rehabilitation was vital, as were funding commitments and willingness to deliver on them by government and other donors.
Budy P. Resosudarmo

Backmatter

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