Optimal Resource Allocation for Preparedness and Recovery of Interdependent Systems
Abstract
Disruptive events can have severe economic consequences, and input-output models can be used to measure how direct
impacts propagate to other economic sectors. Investing in infrastructure and industry sectors can lessen those direct
impacts, but it is often difficult to determine the level of resources that should be allocated to prepare for a disruption
and how best to allocate resources in response to a disruption. We develop a model to help a decision maker allocate
resources to prevent a disruption and to help individual industries recover if the disruption occurs. Resources allocated
in advance of the disruption reduce the likelihood of the disruption, and resources allocated if the disruption occurs
are divided among allocations to individual industries and allocations that help all industries recover simultaneously.
The decision maker chooses these allocation amounts with the objective of minimizing the expected production losses
from the disruption. The Deepwater Horizon oil spill, which adversely impacted several industries in the Gulf region
in 2010, serves as a real-world case study for this decision model.
Description
Includes supplemental material: Presentation
Western Economics Association International Annual Conference, June 2013, Seattle, Washington
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.Collections
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