Modeling the Multisector Business Interruption Ratio in Earthquake-Struck Regions

Abstract

Business interruption ratio (BIR), the ratio of reduced production or service level of a business to the predisaster level when it reopens in the aftermath of a disaster event, is a significant indicator of the overall disaster-induced economic impacts. This study proposes a new analytical framework for modeling the BIR of businesses in different economic sectors in earthquake-struck regions. The proposed framework assesses and integrates the impacts of (1) the sector-specific dependence of the businesses on different operation factors, (2) the recovery of operation factors during business closure in the aftermath of earthquakes, and (3) the earthquake-induced changes in final demand for the products or services provided by the businesses. A case study in Mianzhu, China, a county greatly impacted by the 2008 Wenchuan Earthquake, was conducted. The results showed that the proposed framework reflected the impacts of the aforementioned factors on BIR and yielded promising BIR estimation accuracies. The findings are expected to advance the existing knowledge about the determinants of BIR and support the development of informed recovery strategies and measures to effectively reduce the business interruption losses in earthquake-struck regions.