Sequencing Lifeline Repairs After an Earthquake: An Economic Approach

Recoveries after recent earthquakes in the U.S. and Japan have shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts. We apply tools from the mechanisms design literature to show ways to integrate economic incentives into the management of natural disasters and discuss issues related to the application to seismic event recovery. The focus is on restoring lifeline services such as the water, gas, transportation, and electric power networks. We put forward decisional procedures that an uninformed planner could employ to set repair priorities and help to coordinate lifeline firms in the post-earthquake reconstruction.
This work was supported by the Earthquake Engineering Research Centers Program of the National Science Foundation, under Award number EEC-9701568 through the Pacific Earthquake Engineering Research Center (PEER) and by a Marie Curie Individual Fellowship to the first author.