An Adaptive Regional Input‐Output Model and its Application to the Assessment of the Economic Cost of Katrina

This article proposes a new modeling framework to investigate the consequences of natural disasters and the following reconstruction phase. Based on input-output tables, its originalities are (1) the taking into account of sector production capacities and of both forward and backward propagations within the economic system; and (2) the introduction of adaptive behaviors. The model is used to simulate the response of the economy of Louisiana to the landfall of Katrina. The model is found consistent with available data, and provides two important insights. First, economic processes exacerbate direct losses, and total costs are estimated at $149 billion, for direct losses equal to $107 billion. When exploring the…