A General Equilibrium Analysis of Electricity Lifeline Losses Following a Debilitating Earthquake in Memphis, Tennessee

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Gauri-Shankar Guha


Memphis, Tennessee is adjacent to the New Madrid fault zone that experienced the largest earthquakes to have ever hit North America. A major earthquake today will cause structural and urban lifeline damages resulting in huge economic losses extending to other regions, because of trade and transportation linkages. The computable general equilibrium (CGE) framework allows complete economy modeling with flexible and disaggregated specification of technology, non-linear behavioral responses of households and institutions to prices and markets, and the capability to value lost resources. Supply disruptions from earthquakes are not uniformly distributed over space. This feature is modeled as constraints on resource availability differentiated by economic sectors. This paper advances the CGE model framework for hazard loss estimation by developing a methodology that incorporates supply constraints for electric service availability. The analysis also addresses issues of disequilibria pertaining to natural hazards, such as import/export limits, price and labor market rigidities. (Q54, R32)

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