Regional Indirect Impacts of Wildfire Damages on Outputs of Forest and Tourism Sectors

Abstract

The purpose of this dissertation is to develop an analytical framework for estimating regional indirect impacts of wildfire damage on forest and tourism industry. The methodology was composed of Inter Regional Computable General Equilibrium (IRCGE) model, wildfire damage model, transportation demand model, and tourism expenditure model. The IRCGE model is described two macro regions under the neoclassical economic theory, which established with social accounting matrix in 2013 base year. The wildfire damage area model estimated burnt areas considering high uncertainty based on data of temperature, wind speed, humidity from the Ministration of Korea Meteorology and wildfire statistics, forest type, slope features by spatial unit from Korea Forest Service. The transportation demand model considered the efficiency of road accessibility between zones of the road network of Korea. Lastly, tourism expenditure model is estimated by reduction of tourism spending as increasing transportation cost caused by the wildfire. The estimated burnt area in the wildfire damage area model affected to the production loss, decline in final demand of forest products, increase of transportation expenses, and the decrease of tourism expenditure in the destination. In order to examine the validity of the developed IRCGE, a simulation on the Goseong wildfire was conducted for Gangwon province considering Intergovernmental Panel on Climate Change (IPCC)s prospects for climate changes, the emission scenario of the Representative Concentration Pathways(RCP8.5). There is a suitable place to analyze the indirect impact on forest and tourism industry because it is a typical tourist destination and mountains covered more than 80% of the total area of the province. Markov Chain Monte Carlo method was adopted to estimate ranged burnt areas considering the high uncertainty of climate and topography due to the nature of wildfire, the change of transportation accessibility, and the loss of tourism expenditure. The economic effects of Goseong wildfire were analyzed by using the experiment of the wildfires damage under the cases of without or with climate change. Gross Domestic Product (GDP) in Korea due to the wildfire damage decreased by -0.01% under the without climate change, -0.04% when considering climate change. The Gross Regional Product (GRP) of the Gangwon Province decreased from -0.25% to -0.55% (-0.069 ~ -0.153 billion US$) due to Goseong wildfire under the no climate change and from -0.51% to -1.33% (-0.143~-0.344 billion US$) under the climate change (RCP 8.5). The value added of industrial changes in Gangwon province decreased from -12.10% to -17.43% in forest sector and from -0.71 to 0.85% in tourism sector due to the fire damage. The value added losses of the industry under the climate change will be about 1.5 to 2.2 times larger than the scenario without climate change. On the other hand, GRP in the rest of Korea (ROK) enjoyed reflex benefits from 0.027~0.06 billion US$ due to the wildfire damage in Gangwon Province, and value added changed within the range of -0.191 ~ 0.182 billion US$ in ROK under the climate change scenario. This dissertation developed a framework for estimating economic effects with considering the climate change applicable to other natural or manmade disasters. The developed framework was applied to wildfire damage and confirmed its usefulness. The results of the analysis can be used as a basis for establishing the government budget for disaster prevention and magnitude of the subsidy considering prioritized monetary losses by each industry. In addition, it can be used to calculate the insurance premium for damage compensation. In the further research, it can be extended to develop a quarterly model to improve the accuracy of the economic estimates or dynamic model to consider the long-term recovery depending on the magnitude of the disaster. With regard to the policy, it need to be increasing the scale of the disaster prevention budget in response to the economic losses, providing a detour plan to improve transportation accessibility to damaged regions, and aggressive tourism marketing policy to promote tourist destinations.