JDR Vol.7 No.2 pp. 203-214
doi: 10.20965/jdr.2012.p0203


Economic Recovery Scenario Planning for a Tokyo Inland Earthquake

Shingo Nagamatsu* and Haruo Hayashi**

*Faculty of Safety Science, Kansai University, 7-1 Hakubaicho, Takatsukishi, Osaka 569-1098, Japan

**Disaster Prevention Research Institute, Kyoto University, Gokasho, Uji-shi, Kyoto, Japan

August 15, 2011
December 14, 2011
February 1, 2012
economic damage, recovery policy, policymaking under uncertainties, strategic planning
The economic damage caused by a Tokyo Inland Earthquake disaster is estimated at 112 trillion yen by the Central Disaster Management Council of Japan. This figure alone is insufficient to present a concrete image of actual implications of an earthquake on economic activities and problems that arise in the recovery process, making it difficult to consider specific countermeasures. In order to cope with such a problem, we employed a “scenario planning” as one of the decision-making methods used in business management, under uncertainty to develop four scenarios of economic damage and recovery processes after the disaster. These scenarios are classified by the following two major uncertainties. The first uncertainty is a default risk of the Japanese government. In the event that Japan’s financial condition further deteriorates or the damage caused by the earthquake far exceeds the assumed scale, fund procurement to finance the recovery will become extremely difficult. The second uncertainty is a gap between demand and supply in a recovery-related market, especially in the construction sector. If the gap is sufficiently large compared with the scale of recovery, it is possible to swiftly restore houses, infrastructure and corporate facilities without price hikes. Contrarily, restoration will take time in case of a narrow gap in demand and supply, resulting in higher price hike risk. In an event of a Tokyo inland earthquake in a scale estimated by the Central Disaster Management Council of Japan, it is difficult to foresee that this alone will compel the Japanese government to all into default. However, the scale of the domestic construction market has shrunken to almost half from the time of the Hanshin Awaji Great Earthquake, and there is an apprehension that domestic price hikes could become serious and could physically delay restoration. In order to cope with such a situation, there is a need to consider international strategies including seeking international cooperation in restoration projects as well as assistance in debris removal, waste disposal and reconstruction.
Cite this article as:
S. Nagamatsu and H. Hayashi, “Economic Recovery Scenario Planning for a Tokyo Inland Earthquake,” J. Disaster Res., Vol.7 No.2, pp. 203-214, 2012.
Data files:
  1. [1] A. Akai, “Enhancing competitiveness of urban cities and ideal direction of finance market,” Civil Engineering, Vol.94, No.6, 2009 (in Japanese).
  2. [2] Bank of Japan, “Development of the Business Continuity Management of Bank of Japan,” 2003 (in Japanese).
  3. [3] Central Disaster Management Council, “Survey report of succession of lessons learned from past disasters: 1923 Kanto great earthquake (Vol.3),” 2009 (in Japanese).
  4. [4] H. Kaji, “Urban disaster management system: Socia-engineering approach to seismic disaster management,” Daisuke Simotsuru and Motohiko Hirono (Eds.), Natural disasters and disaster prevention, Vol.21, Japan Society for Science Promotion, 1995 (in Japanese).
  5. [5] H. Oota, “Economics of large earthquake disasters,” OS publications, 2001 (in Japanese).
  6. [6] H. Takeuchi, “The history of the economy of Showa era,” Chikuma Shobo, 1988 (in Japanese).
  7. [7] H. Toya and M. Skidmore, “Economic Development and the Impacts of Natural Disasters,” Economics Letters, Vol.94, pp. 20-25, 2008.
  8. [8] J.M. Bertrand, “The Political Economy of Large Natural Disasters,” Clarenden Press, 1993a.
  9. [9] J. M. Bertrand, “Natural disasters situations and growth: a macroeconomic model for sudden disaster impacts,” World Development, Vol.21, No.9. pp. 1417-1434, 1993b.
  10. [10] K. Endo, “The great Hanshin-Awaji earthquake: the diary of the Kobe branc manager, Bank of Japan,” Nihonshinyouchosa Inc., 1995 (in Japanese).
  11. [11] K. Takahashi, “The history of business transition in Taisho and Showa era in Japan,” 1955 (in Japanese).
  12. [12] K. Takahashi and T. Morigaki, “The history of Showa Financial Crisis of 1927 in Japan,” Kodansha gakujyutu bunko, 1993 (in Japanese).
  13. [13] K. Tokuoka, “The Outlook for Financing Japan’s Public Debt,” IMFWorking Paper, WP/10/19, 2010.
  14. [14] Ministry of Economy, Trade and Industry, “White Paper,” 2006 (in Japanese).
  15. [15] M. Suzuki, “Lessons learned from Showa Financial Crisis of 1927 in Japan,” Kodansha publishing, 1999 (in Japanese).
  16. [16] Munich Re., “Topics, Annual Review: Natural Catastrophes 2002,” 2003.
  17. [17] Munich Re., “Topics Geo, Natural catastrophes 2009: Analyses, assessments, positions,” 2010.
  18. [18] National Land Agency, “Survey report of the reconstruction policy of damaged urban area by seismic disasters,” 1986 (in Japanese).
  19. [19] P. Hadfield, “The coming Tokyo earthquake: sixty second that will change the world,” Tuttle Publishing, 1995.
  20. [20] P. Tasker, “The Tokyo earthquake leads to world depression,” Newsweek, 1995 (in Japanese).
  21. [21] S. Forge, “Forecasting quantitatively using micor/meso/macroeconomics with scenarios for qualitative balance,” Foresight, Vol.11, No.1, pp. 43-60, 2009.
  22. [22] S. Forge, C. Blackman, and E. Bohlin, “Constructing and using scenarios to forecast demand for future mobile communications services,” Foresight, Vol.8, No.3, pp. 36-54, 2006.
  23. [23] S. Ikeda, Y. Sakai, and M. Tawana, “Risk, environment and economy,” The Keiso Syobo, 2004 (in Japanese).
  24. [24] S. Nagamatsu, “Introduction to disaster reduction policy,” Kobundo publishing, 2008 (in Japanese).
  25. [25] S. Takemori, “World deflation will come three times,” Kodansha, 2006 (in Japanese).
  26. [26] T. Takashima, “The day of the catastrophic earthquake,” Chikumashobo publishing, 2007 (in Japanese).
  27. [27] T. Tomita, “The history of public bond,” Toyo Keizai shinposha, 2006 (in Japanese).
  28. [28] Y. Kawata, “Survival from super urban disasters,” Shinchosha Publishing, 2006.

*This site is desgined based on HTML5 and CSS3 for modern browsers, e.g. Chrome, Firefox, Safari, Edge, Opera.

Last updated on Jun. 03, 2024