Vulnerability of London's Economy to Climate Change: Sensitivity to Production Loss
Journal of Environmental Protection
A variant of the Adaptive Regional Input-Output model (ARIO) has been developed to explore the sensitivity of the London economy to loss of production capacity in sectors affected by climate change related damage. The model is designed for linking to an Event Accounting Matrix (EAM) produced by climate and engineering teams, and then follow this damage through direct and indirect losses in the economy during a recovery process that is either demand-led (in which recovery of production capacity
... roduction capacity takes place only as demand recovers) or investment-led (where recovery of production capacity can precede demand). Outputs from the model are used to assess the relative vulnerability of London's economy to production capacity (Capital stock) loss in each of the 42 economic sectors, for purposes of identifying where to most effectively allocate resources to climate change adaptation strategies or to recovery operations when used in conjunction with an EAM. Measures of impact related to GDP loss, recovery time and the ratio of indirect to direct losses are developed for these scenarios. Results show that indirect losses are a significant component of total losses, with a multiplier of between 1.3 and 2 depending on the scale of initial damage. JEP 555 13) 10% of pre-disaster production, and initial 20% reduction in Labour. The initial increase in demand relative to pre-damage levels is driven by reconstruction after the event. Figure 3. Plots of recovery of production versus time for a range of damage fractions. Figure 4. Indirect/Direct losses as a function of direct losses when all sectors experience the same fractional loss in production capacity as a result of the extreme weather event. In this analysis, damage to the transport infrastructure is held constant to allow for assessment of vulnerability of the economy to only direct loss of production capacity. Hence, the indirect losses do not go to zero as the direct costs go to zero in this figure.