CREATE’s economic analysis researchers estimate consequences and costs of terrorism and natural hazards as well as evaluate investments in mitigation and resilience to reduce risks.
Terrorist acts can have extensive negative consequences, beginning with death and injury, property damage and business interruption. However, negative impacts can be magnified greatly by a combination of ordinary multiplier or general equilibrium effects, cascading infrastructure system failures, and behavioral responses stemming from fear. At the same time, resilience can be enhanced at all levels–individual households and businesses, markets, supply chains, and the economies of regions and the nation as a whole.
CREATE researchers empirically estimate consequences and risk reduction implementation costs. At the microeconomic level, benefit-cost and econometric analysis are refined and used for individual projects, products or markets. At the macroeconomic level, computable general equilibrium and input-output models are refined and used.
CREATE’s economic consequence framework provides a comprehensive macroeconomic evaluation of risk-based outcomes along with risk-informed social benefit-cost analysis.
Our framework has been used for assessment across threat categories (natural hazards, bio-threats, terrorist attacks, technological accidents), and has been used in numerous studies of businesses, infrastructure service providers and homeland security agencies (e.g., cost-effectiveness of individual resilience tactics, border-crossing wait times, terrorism countermeasure spillover effects on business, electricity reliability, cyber threats, supply-chain vulnerability, location and migration decisions, post-disaster public assistance, and economic recovery).
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