Using an integrated dynamic economic model to support infrastructure investment decision-making
Brown C, McDonald N, McDonald G, Daly M, Seville E. Using an integrated dynamic economic model to support infrastructure investment decision-making. Earthquake Spectra. 2023;0(0). doi:10.1177/87552930231195040
Abstract
Evaluating investment options to enhance earthquake resilience of infrastructure requires a deep understanding of the economic impacts of loss of infrastructure services. This article presents an economic impact assessment of a hypothetical Wellington Fault earthquake event to support the case for a suite of infrastructure resilience enhancements in Wellington, New Zealand.
The project builds a comprehensive picture of the event, pre-investment, including electricity disruptions of up to 6 months, temporary population movement of 25%, and business relocation of up to 11% in some industries. MERIT, a dynamic economic analysis tool specifically designed to evaluate “shock” events, estimates the proposed investment options (valued at NZD2016 2.2–2.6 billion) result in reduced event losses of NZD2016 6 billion over 5 years.
The project illustrates the need to continue improving modelling capability to support decision processes and to concurrently evolve decision-making processes to match our increasingly sophisticated, dynamic, and multi-dimensional economic evaluation tools.