Abstract
This paper quantitatively examines the economic impact of urban flood disasters in Tokyo on the supply chain. It accomplishes this task by using geographic information system (GIS) data on inter-firm transactions. First, we use flood simulation analysis data to identify firms that were unable to continue business operations due to flood damage. Second, we employ inter-firm transaction data to detect businesses that are related to affected firms. Subsequently, we discuss and analyze the industrial structure of the identified companies that have business associations with affected firms. Finally, we focus on the indirect economic damage caused to these companies and estimate the affected transaction amount in consideration of the magnitude of their linkages with directly affected firms. The present investigation reveals several interesting results. First, 19-29% of companies in Japan are associated with affected firms through business interests. This figure increases to nearly 50% when fifth-order firms are included: those companies connected to affected firms through the five shortest-link paths in the trading network. Many firms could thus be affected by a natural catastrophe even when they are actually located outside the core disaster area. In addition, the economic damage is estimated to be nearly 1.3% of Japan’s gross domestic product (GDP).
