Developing the business behaviours module within MERIT

Charlotte Brown, Erica Seville, Joanne Stevenson, Sonia Giovinazzi, John Vargo

August 2015. ERI Research Report 2015/02

Executive Summary

This report is an output of the Economics of Resilient Infrastructure (ERI) research project, funded by the New Zealand government to develop a new spatial decision support system for infrastructure disruption in New Zealand. The system, referred to as ‘Measuring the Economics of Resilient Infrastructure Tool’ (MERIT), will be used to support government and infrastructure provider decision-making by enhancing their understanding of the economic impacts of infrastructure outages.

MERIT consists of a suite of interlinked modules incorporating spatial features of a region and its infrastructure networks, economic activity, business behaviours, interdependencies, and policy options. These modules can be shocked using infrastructure disruption scenarios (e.g., volcanic eruption, significant single infrastructure outage) to understand the economic impacts of such disruptions.

This report describes the proposed method for integrating business behaviour into the larger MERIT model. The business behaviours module for MERIT has been developed using empirical data gathered following the 2010/2011 Canterbury earthquakes. The Canterbury earthquake business behaviours data has provided an effective platform for developing quantitative and qualitative business behaviour models.

The ERI Business Behaviours team has developed a business behaviours causal framework to describe the effect of disruptions on an organisation’s operability or their ability to meet demand. The framework links external infrastructure and non-infrastructure impacts to the degree of disruption experienced by individual organisations. In turn, the framework shows that an organisation’s operability is affected by that experienced disruption; along with other organisational factors that can improve operability levels in the face of disruption, including organisational demographics, pre-event mitigation, post-event adaptation, and resilience. With this framework as a conceptual guide, linear regression modelling and other complementary statistical methods were used to assess the Canterbury earthquakes dataset. From these analyses we determined the relative strengths of the variable relationships within the framework and subsequently developed an operability function for input into the full MERIT suite. There were four main steps in determining the operability function:

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