The spatial and temporal ‘cost’ of volcanic eruptions: assessing economic impact, business inoperability, and spatial distribution of risk in the Auckland region, New Zealand

Abstract

Volcanic risk assessment has historically concentrated on quantifying the frequency, magnitude, and potential diversity of physical processes of eruptions and their consequent impacts on life and property. A realistic socio-economic assessment of volcanic impact must however take into account dynamic properties of businesses and extend beyond only measuring direct infrastructure/property loss. The inoperability input-output model, heralded as one of the 10 most important accomplishments in risk analysis over the last 30 years (Kujawaski Syst Eng. 9:281-295, 2006), has become prominent over the last decade in the economic impact assessment of business disruptions. We develop a dynamic inoperability input-output model to assess the economic impacts of a hypothetical volcanic event occurring at each of 7270 unique spatial locations throughout the Auckland Volcanic Field, New Zealand. This field of at least 53 volcanoes underlies the country’s largest urban area, the Auckland region, which is home to 1.4 million people and responsible for 35.3% (NZ$201481.2 billion) of the nation’s GDP (Statistics New Zealand 2015). We apply volcanic event characteristics for a small-medium-scale volcanic eruption scenario and assess the economic impacts of an ‘average’ eruption in the Auckland region. Economic losses are quantified both with, and without, business mitigation and intervention responses in place. We combine this information with a recent spatial hazard probability map (Bebbington and Cronin Bull Volcanol. 73(1):55-72, 2011) to produce novel spatial economic activity ‘at risk’ maps. Our approach demonstrates how business inoperability losses sit alongside potential life and property damage assessment in enhancing our understanding of volcanic risk mitigation.