CREATE Receives DTRA Award to Study Economic Consequences of Large-Scale Disasters

The Center for Risk and Economic Analysis of Threats and Emergencies (CREATE) has received a new research award from the Defense Threat Reduction Agency (DTRA) to study the economic consequences of large-scale disasters.   CREATE Senior Research Fellow and Price Research Professor Adam Rose will serve as principal investigator and research coordinator. CREATE External Senior Fellow Peter Dixon will lead the economic analyses for the project, and faculty from the University of Pittsburgh and the University of Texas will contribute engineering expertise.  The overall award is for three years in the amount of $4 million.

The project continues a stream of CREATE research on the economic consequences of disasters. In prior research, CREATE established a comprehensive analytical framework for economic impact analysis that is unique to disasters, modeling resilience and exaggerated behavioral responses. CREATE researchers’ path-breaking work has developed computable general equilibrium (CGE) models to estimate direct and indirect economic consequences of disasters.

CREATE Senior Research Fellow and
Price Research Professor Adam Rose

CREATE External Senior Research Fellow Peter Dixon

CGE models divide the economy into a large number of sectors, characterized as a set of interrelated supply chains. CGE are highly complex models that require customized construction for each applicable region along with calibration for resilience and behavioral linkages. Accordingly, CREATE has developed a reduced-form approach, which utilizes results from hundreds of simulations of the economic consequences of a given threat type (e.g., earthquake, terrorist attack, pandemic) and applies regression analysis or tables of parameter values to simplify estimation.  

The first of these breakthroughs was the Economic Consequence Analysis Tool (E-CAT) by Adam Rose and his research team. E-CAT is a decision-support tool that can be used by analysts and policy-makers to rapidly estimate the economic consequences of a diverse array of threats. Peter Dixon and his team subsequently developed a similar approach, named GRAD-ECAT, for the analysis of nuclear and radiological threats.  GRAD-ECAT will be extended in the new DTRA project.  

Posted February 4, 2022