Development of reference economic futures
When we model the impact of disaster events, we often use models that match the economy as it is structured today. But disasters are unpredictable. They can occur tomorrow, or in 5, 10, 50 or 100 years. When deciding how to reduce the impacts of future disasters, it is important to consider the ways our economy might change in the future and to assess the disaster impacts against the background of a range of potential future economic pathways.
In this project, we have developed three reference future economic futures. They were developed by analysing many future scenarios created by other experts to find representative sets, in conjunction with detailed historical data analysis and forecasting for specific prices and other economic parameters. These three scenarios span a wide range of potential world economic pathways and allow testing out possible disaster preparedness and mitigation measures – to ensure that we are making robust decisions – no matter what the future holds.
The reference economic futures
In this future, frosty international relations has slowed the flow of goods, people and information between countries. Traditional export activities are increasingly replaced with activities to ensure self-sufficiency. Environmental policies are more inward-facing too, focused particularly on protection from competing claims but without a particularly strong focus on sustainability. The fragmentation of the world’s economy, slows economic growth, both globally and in New Zealand.
In this future, information, goods and people flow freely around the world. This creates a highly competitive market landscape and strongly growing economy. Technology innovation and adoption is rapid, improving the efficiency of many industries, including the upskilling of the workforce. In this high growth, technology-driven future, environmental concerns have taken a back-seat and fossil fuel is still a dominant fuel source, albeit supplemented by others such as bio-fuel. This reference economic future is further divided into two sub-futures.
In New Zealand, technology has been adopted with abandon. Automation is replacing jobs and new, technology-driven markets are significantly impacting traditional industries.
In New Zealand, technology is enhancing our traditional industries. Technology is being developed and applied to create more value but with a stronger focus on adding value to labour rather than replacing.
In this future, prioritisation has been given to addressing environmental concerns and technology plays a key role in making the transition to a more ‘green’-oriented economy. Government policies encourage a switch to cleaner modes of production and changes in consumption choices. Greater energy efficiency and increased uses of renewable energy sources ensue. Demand for forestry increases to support a more sustainable construction industry, while demand for dairy and meat reduces, as less resource-intensive protein sources become more popular. This new economy enables moderate economic growth both globally and in New Zealand.
Development of an online tool for rapid economic evaluation of road closure scenarios
(Client: New Zealand Transport Agency)
NZTA have undertaken pilot studies applying MERIT to real recent major network outages. This includes a pilot of the SH3 Manawatu Gorge 2011-12 outage [PDF, 403 KB].
NZTA have also developed a MERIT Primer [PDF, 741 KB] that provides a digestible summary of the findings.
Impact on Central Government Productivity (NZ)
A project is currently underway examining the productivity impacts of a major disruption on New Zealand Government agencies based in Wellington.
The project includes running a simulation of an Alpine Fault earthquake event and evaluating the economic consequences using the MERIT. Alpine Fault scenario modelling will derive the information on building disruptions from the RiskScape model. RiskScape contains building asset information for the whole of Wellington, and calculates the level of building damage (i.e., using a five-state classification system) based on the nature of the hazard event, and the ‘fragility’ of assets.
Wellington Resilience Programme Business Case (PBC)
(Client: Greater Wellington Regional Council for Wellington Lifelines Group)
This is a project initiated by the Wellington Lifelines Group. It aims to help enable smart investment decisions for public value across a raft of lifeline organisations and wider sectors.
MERIT, together with the Riskscape damage and loss modelling tool, was used to evaluate the wider economic benefits different infrastructure investment options would have. This project is due for completion mid-2018.
Other Case Studies
Water services outage, Auckland, NZ
This was a single-infrastructure outage case study undertaken under the ERI programme to test and refine Non-Spatial MERIT. The pilot study was developed in collaboration with Watercare and involved a hypothetical scenario of significant interruption in water service provision in Auckland.
Electricity transmission outage, Auckland, NZ
This study was part of the ERI programme, using Interoperability MERIT to assess a short-term outage associated with an electricity transmission outage in the Auckland Region. (Client: Vector/Transpower)
Transportation disruptions following the Kaikoura earthquake, NZ
Non-Spatial MERIT was used immediately following the event to gauge the scale and extent of the likely disruption to transport as well as to evaluate alternative road-opening options. (Client: Ministry of Transport and Ministry of Business, Innovation and Employment)
Alpine Fault earthquke, NZ
This ongoing case study, applying Non-Spatial MERIT, examines the economic consequences of a magnitude 8 earthquake on the South Island’s Alpine Fault. This is the first study involving multiple infrastructure failures to be undertaken in the ERI programme. (Client: Ministry of Civil Defence and Emergency Management)
Fuel supply outages, NZ
This study is currently underway and is focused on using Non-Spatial MERIT to assess the implications of scenarios of domestic and international fuel supply outages on the New Zealand economy.
Economics hotspot analysis, Waikato, NZ
This analysis is aimed at identifying limiting factors in the region’s economy, that if disrupted, could have significant socio-economic flow-on effects to both the Waikato and New Zealand economies. (Client: Waikato Regional Council, Ministry of Business, Innovation and Employment)