Modeling the Effects of Drought in Urban Economies Using Regional Input-Output Analysis

Abstract

Aim: This research examines the economic impacts of drought severity and duration to interdependent production sectors in an urban catchment. Methodology: We developed a dynamic water input-output model extension to analyze the drought vulnerability and resilience of economic sectors in an urban region. The model utilizes the North American Industry Classification System (NAICS), which encompasses 65 economic sectors in our regional analysis. The model is applied to a case study of the United States (US) National Capital Region, a predominantly urban region that is considered one of the major economic drivers of the US. Results: Simulation results identify the critical economic sectors that experience the highest inoperability and economic losses as a result of water reduction schemes implemented during drought events. In the two scenarios studied (drought warning and drought emergency), sectors exhibit disproportionate levels of resilience and sensitivity to the magnitude and duration of water reduction. In each case, the economic loss and inoperability rankings of critical sectors differ due to differences in the quantity and value of the sectors’ production outputs. Conclusion: Observed data trends provide valuable insights for decision makers in formulating drought preparedness policies, water conservation programs, and short-term responses aimed to reduce water consumption in cases of emergency. The dynamic water reallocation I-O model developed in this study can be applied to other drought-prone regions and be used to generate insights on the economic consequences of drought, ecosystem thresholds, and water reallocation strategies that minimize the economic impacts of prolonged drought events and their ripple effects across sectors.