Analyzing the Economic Impacts of the Expected İstanbul Earthquake: An Input‐Output Model Integrated with a System Dynamics Model

ABSTRACT

İstanbul plays a significant role in the economy of Türkiye due to its leading position in almost all economic activities. However, the city is prone to a major earthquake risk which may have devastating impacts on human lives as well as the regional and national economy. The possible economic losses associated with an earthquake affecting İstanbul have been a concern for several decades, but scientific studies estimating such losses remain limited, except for some expert opinion‐based assessments. Thus, this study introduces a hybrid methodology to estimate the economic impacts of a potential earthquake that would affect İstanbul. The method integrates an input‐output model with a system dynamics model and makes it possible to examine the effectiveness of several policies to alleviate the negative impacts of the earthquake on the economy under various earthquake scenarios. Here, a bi‐regional demand‐side input‐output table for the İstanbul Region and the rest of Türkiye is generated for the first time using a non‐survey method and the dynamic relationship between the fundamental components of an economic system is modeled using the system dynamics approach. Then, the bi‐regional input‐output table and system dynamics models are integrated through a coupling mechanism, and the economic impacts of possible earthquakes that may affect İstanbul are evaluated for four different scenarios and three policy families with six policy variants. The findings demonstrate that the hybrid framework can reveal the sector‐specific and dynamic economic consequences of an earthquake and help identify policies that may enhance post‐disaster recovery.