Simplified assessment of the regional economic impacts of interruption to transport corridors with application to the 2011 Queensland floods.
Rolfe, John ; Kinnear, Susan ; Gowen, Rebecca 等
1. INTRODUCTION
Assessing the economic costs of natural disasters is important
because it can (a) inform the need to allocate funds for repairs as well
as for meeting immediate economic and social consequences; (b) help
predict the wider impacts on communities and economic frameworks; and
(c) assist in designing infrastructure and policy settings that reduce
the risks from future events (West and Lenze 1994; Hallegate, 2008).
Estimating the cost of natural disasters is complex, with variations by
the type of disaster (Loayza et al., 2012), confounded in some cases
with the positive impacts of weather events and reconstruction
activities (Baade et al. , 2007; Loayza et al. 2012). The lack of a
universally accepted assessment method also adds to the complexity when
estimating the cost of natural disasters (Pelling et al., 2002; Carvello
and Noy 2010). In many cases, costs are calculated solely on the basis
of direct losses, usually repair and replacement costs, typically from
the reported costs of insurance repairs (West and Lenze 1994). However,
the total costs of natural disasters are actually much greater than this
when the wider socio-economic impacts are considered across a region
(Pelling et al., 2002; Hallegate 2008), including the impacts on small
businesses and on longer-term regional economic development (Zhang et
al., 2009).
Quantifying the economic costs of natural disasters is useful in
local or regional settings when evaluating the improvements to
infrastructure or services that would reduce disaster impacts. However,
the human resources and foundation economic data needed to prepare
comprehensive assessments are rarely available at a regional level. This
generates a requirement for simplified assessment approaches and
estimates that can be prepared at local or regional scales, rather than
focussing on specific sectors of the economy, which has been a problem
in past studies (Loayza et al., 2012). Estimates about the costs of
natural disasters are required to evaluate proposals for investments in
infrastructure, to assess economic and business vulnerability, to inform
regional economic development planning, and help ensure that the impacts
of future climatic disasters are properly considered (Zhang et al.,
2009). It can also be helpful for business owners to have access to the
data compiled from a simplified microanalytic study, as this might
assist business planning for disaster preparedness (Zhang et al., 2009).
The combination of floods and cyclones that affected Queensland,
Australia in the summer of 2010-11 provides an excellent case study
example by which the substantial economic consequences of natural
disasters can be calculated. The flooding in December and January,
followed by Cyclone Yasi in February, is estimated to have affected 70
percent of Queensland by area and around 60 percent of the state
population (PWC, 2011). Several lives were lost, and there were large
personal and social impacts in many communities. Significant impacts
included damage to roads, damage to more than 50,000 homes and other
infrastructure across the State, major interruptions to coal production
and exports, and losses in agricultural production. In economic terms,
these natural disasters reduced Queensland's 2010-11 Gross State
Product (GSP) by around 2.25 percent, or $6 billion (Queensland
Government, 2011). As at the end of June 2011, the estimated insured
losses due to the Queensland floods was $2.55 billion, with a further
$1.05 billion in claims for damage suffered from Cyclone Yasi (ICA,
2011). However, these largely represent direct and private costs. In
addition, direct public costs, such as the resources needed to rebuild
public assets and provide community support have been predicted at
around $6.8 billion (Queensland Government, 2011).
In the absence of an agreed method for calculating total costs,
most formal studies for the 2011 Queensland floods (e.g. PWC, 2011; IBIS
World, 2011) have divided costs into the direct and indirect components,
including (a) assessing the direct costs of repairing and replacing
damaged assets and infrastructure, (b) assessing the value of lost
production in primary industries, and (c) assessing the impacts on
overall economic performance through slowdowns in growth. The latter is
typically measured as changes in Gross Domestic Product or Gross State
Product (dependent on whether the analysis is at national or state
level). However, although estimates of total impacts remain useful in
guiding macroeconomics and policy settings, more detailed information
relating to sub-regional level impacts is critical in evaluating the
appropriateness of current policy settings and infrastructure, as well
as in evaluating the case for future investments (such as in public
infrastructure). Unfortunately, assessing the sub-regional economic
impacts of natural disasters is difficult because of the complexity of
events, limited data availability and the problems inherent in
apportioning out a subset of effects and consequences to a particular
geographic area or period of time.
The economic impacts of the flood on the city of Rockhampton
provide a useful case study given the centre's strategic position
on the State's major north-south road transport corridor and the
lack of any significant damage to infrastructure to cause confounding
stimuli from reconstruction. There was little physical damage in
Rockhampton because the periodicity of the river flows (over a
weeks' notice of the impending river rises), together with the long
history of flooding in the region has meant that most housing stock and
other assets are already located, or can be relocated, out of the danger
zone. The 2010/11 flood event caused closure of the major highways and
the airport, isolating Rockhampton as well as north Queensland, with
subsequent impacts on the regional and state economy. Estimating the
economic costs of closures in road, rail and air access into Rockhampton
will be useful in evaluating the case for investment in new regional
infrastructure for the Bruce Highway and the Rockhampton airport.
The key research objectives of this study were (a) to establish an
appropriate methodology for the simplified assessment of the economic
impacts of transport and network interruptions, and (b) assess the
indirect impacts on both the Rockhampton Regional and Queensland economy
of transport interruptions across road and air sectors as a consequence
of the flooding at Rockhampton. The case study is notable in that it
assesses only a small part of the total impacts of the flood and cyclone
damage on the Queensland economy, where closure of transport options at
Rockhampton had varying impacts on communities, businesses, employees
and households. The study is also notable in that most of the impacts to
be assessed were indirect impacts such as the inability of the public to
access employment, goods and services, and for businesses to access
staff, suppliers or customers. Thus, a key methodological focus for this
study was the particular challenges associated with isolating and
quantifying a small set of mostly indirect impacts (i.e., excluding
physical damage), from the much broader set of major economic costs
linked with the flooding.
An overview of the methodology used is provided in the next
section, followed by a description of the flood impacts in section 3.
Cost estimates using the economic slowdown and lost travel time
approaches are provided in sections 4 and 5 respectively, and discussion
about other costs and final points are made in sections 6 and 7.
2. METHODOLOGY: ASSESSING AND MODELLING THE COSTS OF NATURAL
DISASTERS
Natural disasters are a regular occurrence in Australia. Based on
data from the Insurance Council of Australia (ICA), catastrophic events
in the country cost on average about $1 billion per year nationally in
insured losses (ICA, 2011). However, this average can be distorted by
extreme events such as the 1989 Newcastle earthquake, which alone cost
$4.2 billion. In Queensland, floods, severe storms and cyclones have
been identified by Gentle et al. (2001) as the most common, as well as
the most expensive, natural disaster events, costing on average over
$238 million dollars annually to 2000. However, it should be noted that
these figures represent only insured losses: direct economic costs are
likely to be around twice those of reported insured losses (Crompton and
McAneney 2008).
Even when the direct economic costs (such as damage to buildings,
infrastructure and direct income losses) can be measured accurately,
these figures do not reflect the total cost of natural disasters. If the
impacts of natural disasters are to be calculated holistically, this
must take into account not only direct damage repair costs, but also the
additional costs of reduced business turnover, as well as the expenses
of additional logistics and transport alternatives (Pelling et al.,
2002; Cavello and Noy 2010). There are also many other flow-on economic
effects from natural disasters, caused largely by indirect impacts such
as interruptions to, or slowdown in, regional economies, as well as
positive impacts from reconstruction activities (West and Lenze 1994;
Baade et al., 2007; Hallegate, 2008). Assessing the true costs of
natural disasters therefore requires the use of accurate methods for
assessing both direct and indirect costs and benefits (Cavello and Noy
2010).
There are few studies identifying the overall economic implications
of disaster events, and how these can be confounded by business
resilience and rebound effects. For example, economic resilience may
arise because certain business activities can be conducted from
alternative locations (e.g. home office) during a flooding disaster.
This is separate to 'rebound' effects, where increased trade
is experienced post-flood due to catch-up on delayed business activity,
as well as the possibility for business stimulation associated with the
reconstruction effort. The review by Cavallo and Noy (2010) indicated
that research on these issues to date has been inconclusive, with
reports listing a range of negative, positive and net-balance effects in
the medium-term; and many works being focussed on only one or two
sectors of the economy, rather than taking a whole-of-region approach.
Most recently, Loayza et al. (2012) presented data that showed the
potential for rebound or stimulus effects to be limited to mild or
moderate-scale disasters, and only to selected industry sectors.
There is a limited pool of international studies that have
identified the economic impacts of floods or cyclones at a regional
level. Baade et al. (2007) identify the economic costs of Hurricane
Andrew on Miami, highlighting that while there are short run negative
impacts on sales and business activity, the positive impacts of
repurchasing and re-building can subsequently outweigh the negative
impacts. Vigdor (2008) reviewed the economic impacts of Hurricane
Katrina on New Orleans, showing for example, that employment had fallen
across almost all sectors (apart from construction) by an average of
13.6 percent. Xiao (2011) examined the long run effects of the 1993
Midwest flood in the United States, and showed that while the flood
caused short-run declines in per capita income, economic activity
returned to pre-flood conditions in the years after the flood (although
some badly affected agricultural communities suffered economic slowdown
in both short and longer time periods). Loayza et al. (2012) report from
a meta-analysis that the economic effects of flooding appear mixed
because of confounding effects on agricultural production, but estimate
an average economic cost of $136 per person affected from flood events.
In this study, the economic costs associated with the closure of
the transport corridors at Rockhampton were estimated and compared using
two separate approaches. The first approach modelled the downturn in the
affected sub-regional economy, essentially providing an estimate of the
changes in Regional Gross Product or factor incomes as a consequence of
the natural disaster. The second approach assessed costs in terms of the
value of lost travel time (lost production per transport movement that
has not occurred): this is a standard methodology used to assess the
value of improvements in transport infrastructure. These two measures
were chosen as they are relatively simple to implement with the limited
information available for a regional case study.
These approaches measure slightly different economic concepts. The
economic slowdown approach assesses changes in the total production from
an economy, while the travel time approach assesses changes in the value
of economic activity. In a normally functioning economy, where income
(largely salaries and profits) is some proportion of total production,
then changes in economic surplus would be expected to be more closely
related with changes in income than changes in overall production.
Assessing an Economic Slowdown
The 'economic slowdown' approach identifies the direct
value of interruptions to businesses, customers, suppliers and
employment, and then assesses the subsequent indirect and final demand
effects through the use of economic modelling (Cavello and Noy 2010).
Dore and Etkin (2000) proposed a methodology for assessing the full
costs of a natural disaster by first measuring the distortion to normal
economic growth, and then estimating what would be required to restore
the economy to the Gross Domestic Product (GDP) value that would have
been expected in the absence of the natural disaster. Using this
methodology, the total social loss is equal to the loss of value added,
plus the loss of capital and the opportunity cost of labour redirected
to assist with the emergency.
Modelling the indirect effects of natural disaster costs on the
wider economy has most commonly been performed using Input-output (I-O)
or Computable General Equilibrium (CGE) models: each of these have
advantages and disadvantages. I-O models are linear, relatively simple
to construct and are capable of estimating the full range of direct and
indirect costs including integration with transport or engineering
models if necessary (Okuyama, 2009; Hallegatte, 2008). CGE models have
an advantage over I-O models as they can be non-linear, are able to
respond to price changes and can endogenously incorporate import and
input substitutions (Okuyama, 2009). To account for inter-regional
impacts of natural disasters which specifically affect transport
networks Tsuchiya et al. (2007) expands the standard CGE model into a
spatial CGE which includes a transport model covering both freight and
passenger trips. However, one of the challenges with modelling the
impacts of natural disasters is that most economic models are based on
annual or at best quarterly periods while events such as floods occur
over relatively short time frames (Okuyama, 2009). CGE models also rely
on the assumption of rational optimization, which does not necessarily
occur during periods of disaster (Okuyama, 2009).
However, the value of recovery efforts, whether funded by
governments, non-profit organisations, insurance payments or privately,
provides a boost to the local economy and increases economic growth for
a period (Guimaraes et al., 1992; West and Lenze 1994). This confounds
the assessment of impacts on an economy because spending inflows from
recovery efforts offset production losses. The effect is to delay and
minimise the net impacts of a natural disaster on an economy by avoiding
large swings in confidence and expenditure. Failure to account for
offsetting recovery efforts can distort predictions from both I-O and
CGE models (Cavello and Noy 2010).
Value of Travel Time Lost
The value of travel time approach can be estimated by identifying
the value of travel time lost across different classes of travellers and
vehicles. This is performed through the application of standard travel
time values to the estimated number of vehicle and passenger movements
affected by a closure of a transport corridor. The advantages of this
approach are that the key variables (vehicle and passenger movements)
are easier to estimate with some level of accuracy, and the methodology
to value impacts is well established. However, an implicit assumption of
this approach is that the indirect impacts flowing through to other
sectors of the economy are limited.
An alternative approach to valuing changes in travel access is to
estimate the value of changes in travel time, and to then extrapolate
this across different groups of vehicles and travellers (Austroads
,1997; 2003; 2011). The approach taken in Australia is typically to
identify vehicle trips for private/non-business travel, business travel,
commercial vehicles and freight travel. For example, time on public
transport, commuting to and from work, and tourist/bicycle/pedestrian
trips are classified as private travel. In Australia, the value of
private travel and business travel is assessed by Austroads (1997; 2011)
as 40 percent and 135 percent of average weekly earnings (assuming a 38
hour week) respectively.
The lost travel time approach relies on the proper identification
and classification of the number of trips that would have occurred, the
estimate of travel times that would have been involved, and the
application of travel time values. There is a substantial literature
available on the value of travel time savings, which has been summarised
for Australian use by Austroads (2011). For passenger vehicles, this
involves an analysis of typical vehicle uses and costs to generate
estimates of average travel costs. Here, the most important information
is summarised for three particular groups of vehicle travel, as
described below.
Non-Business Travel in Passenger Vehicles
AustRoads (1997) recommended that unpaid private travel time be
valued at 40 percent of seasonally adjusted full time average weekly
earnings for Australia, assuming a 38 hour week. This equates to
$11.49/person-hour, which AustRoads (1997) recommended to be used in the
valuation of private car travel for the following forms of travel:
* commuting to and from work;
* recreational/tourist travel;
* motor cycle travel;
* bicycle travel;
* pedestrian travel;
* public transport waiting time; and
* public transit passenger travel.
Business Travel in Passenger Vehicles
AustRoads (1997) recommended that paid private time for
noncommercial vehicles (cars and vans) be valued at 135 percent of full
time average weekly earnings (less 7 percent assumed for payroll tax).
On this basis, business vehicle travel can be calculated at
$36.76/person-hour.
Freight Vehicles
Austroads (2003; 2011) treats the value of driver time lost for
freight vehicles in the same way as for business travel ($36.76 per
person-hour). However, this does not account for the business costs in
delays in load delivery. These have been estimated separately in
Austroads (2011) at $1.50 for full truck delays per pallet per hour. An
'A' trailer carries 12 pallets and a 'B' trailer 22
pallets.
Air Passenger Travel
The University of Westminster conducted a comprehensive review of
the costs to airlines of delays at all stages of flights (Institute of
Air Transport, 2000). Values were estimated for different groups of
travellers based on the opportunity costs of their time and the travel
delay costs. Results are summarised in Table 1, with adjustments to
values for 2010.
Air Freight Travel
Logistics costs are most commonly estimated through stated
preference estimation of the willingness to pay to reduce travel time
and indirect costs through estimation of the loss of revenue or income.
In a review of 27 similar studies, Hu (2006) found that 23 had used
stated preferences to estimate the value of travel time for freight
transport. The average value of travel time found in these studies was
$23 per shipment per hour (in 1999 US dollars, which equates to
approximately AUS$32 per hour in December 2010).
3. EFFECTS OF FLOODING ON ROCKHAMPTON
The 2010-11 Rockhampton flood was the fourth highest on record
(Figure 1) with over 2,000 properties inundated and over 500 people
requiring evacuation (Rockhampton Regional Council (RRC), 2011). The
Bruce and Capricorn highways were closed between the 3rd and the 14th of
January and the airport for over three weeks between the 1st and the
24th of January, which severely disrupted business trade and caused
significant losses beyond the direct damage caused by the flooding.
[FIGURE 1 OMITTED]
Rockhampton did not suffer the direct flood impacts that many other
Queensland communities experienced. The nature of the flow in the
Fitzroy catchment meant that there was ample advance warning of the
upstream flood peak. Existing reports suggest that the regional
emergency and management systems generally worked well to deal with the
direct impacts of flood inundation on the Rockhampton community,
particularly given that the appropriate planning systems had ensured
that new housing and developments were built away from flood zones
(Queensland Flood Commission of Inquiry, 2011). Nevertheless,
Rockhampton and its neighbouring communities (Gracemere and the
Capricorn Coast) experienced serious flood impacts of a different kind.
The closure of both the road and air transport corridors for long
periods limited access between regional businesses, suppliers, customers
and employees. It also effectively split the Queensland economy into two
sections, disrupting the connectivity between the southern and
central/northern markets.
The direct costs of the floods in Rockhampton were largely caused
by impacts on roads, with some additional impacts on other
infrastructure and private housing. Estimates from the Rockhampton
Regional Council are that total road damage of $56 million occurred in
the local government area. A further $0.9 million in damages occurred to
the Rockhampton airport. In operational terms, the counter-disaster
costs of managing the flood response and highway closures at Rockhampton
was approximately $1.5 million, while the Council lost a further $0.6
million in direct revenue because of the airport closure (personal
comment, Evan Pardon, Rockhampton Regional Council).
The closure of the Bruce Highway and the airport also generated a
range of other indirect costs. With access to the region all but
eliminated, the transport, tourism, service and retail sectors were
severely affected. Whilst major retailers including the two main
supermarket chains were able to organise supplies to be delivered by air
(to Mackay) or by barge (to Rosslyn Bay) before being trucked into
Rockhampton, this incurred significant additional costs and many smaller
retailers were unable to implement similar strategies. In addition, key
industries in the region such as mining could not access any employees,
services or supplies held within Rockhampton during this time.
4. ASSESSING THE IMPACTS USING AN ECONOMIC SLOWDOWN APPROACH
The economies of the Fitzroy Statistical Division and the
Rockhampton Local Government Area within it represent about 7 percent
and 2 percent, respectively, of the Queensland economy. The regional
economy is a complex structure of different economic sectors, with key
drivers from the agriculture, mining and tourism sectors. In the
economic modelling approach, the estimates of an economic slowdown can
be generated by identifying the average change in economic performance
across sectors from the loss of transport access, and extrapolating this
as a percentage of regional economic activity. The regional economic
activity is summarised as the GRP for the Rockhampton area (Table 2).
The level of slowdown in the regional economy was estimated through
a survey of local businesses, conducted by Capricorn Enterprise, the
peak business organisation within the Rockhampton region. The survey was
conducted by telephone during and immediately after the flood period,
with the sample drawn from Capricorn Enterprises' total membership
of approximately 459 businesses. The membership is weighted towards the
tourism, retail, and services sectors, which reflects the most common
groupings of small to medium enterprises within the local government
area (Table 3).
A total of 138 businesses participated in the survey in January
2011, with 72.5 percent of respondents indicating that they had been
affected by the flood. For the proportion that remained unaffected, the
key reasons for escaping impact were that January was either a slow
time, or a period during which they were normally closed. In contrast,
many of the affected businesses reported that they were incurring
substantial costs. Some businesses, particularly in the accommodation
sector, lost 90-100 percent of their business over the period. Others
reported having staff unable to get to work, lack of access to supplies,
some water in their premises, or choosing to close their business as a
precaution against further increases in the flood height. Across the 45
businesses that were able to indicate the proportional downturn in
business conditions, 60 percent indicated that there was no major effect
on their business turnover. The average downturn in business turnover
across all businesses was 22 percent (declining to 18 percent when
tourism businesses were excluded).
To estimate the impacts of the road closure on the economy, the
estimated downturn in business conditions (18.6 percent decline) was
extrapolated to the Gross Regional Product at Factor Cost (industry
factor income) of the Rockhampton region (Table 4) for the period of the
road and airport closures (averaged to 18 days). This generated an
expected reduction in total production in the Rockhampton economy over
that period of $35 million, or about 0.77 percent of the annual gross
regional product. As factor income (wages and profits) is approximately
20 percent of GRP for the Rockhampton economy, the loss of economic
surplus is estimated at approximately $7 million.
5. ASSESSING IMPACTS USING THE VALUE OF TRAVEL TIME APPROACH
The volume of traffic flows that were affected by road closures to
the south and west of Rockhampton have been assessed for both passenger
and freight vehicles in three separate groups (Table 5), drawing on
AECOM (2010), CTEDL (2010) and data provided by the Queensland
Department of Transport and Main Roads. The first are vehicles
travelling through Rockhampton to the north, where it can be assumed
that the impacts will occur elsewhere in the Queensland economy. The
second group focuses on the restrictions to vehicle movements to and
from the Capricorn Coast to the east, and the third group involves
restrictions on local access from Rockhampton to the south and west.
The estimates of impacts on vehicle movements from the road closure
have been valued by applying the rates of travel time costs reported in
Austroads (1997, 2003, 2011), with results summarised in Table 4. Key
assumptions in performing the analysis are detailed as follows.
The hours of delay have been assumed as an average of 72 hours for
all north-south through traffic. This allows for the fact that some
traffic was able to be diverted through western Queensland, and that
opportunity costs are not strictly linear over time. For the east-west
traffic, the hours of delay have been assessed as an average of 24
hours. This allows for the fact that some traffic was able to be
diverted to the north (through Mackay), and that opportunity costs are
not strictly linear over time. For local traffic, an average of 8 hours
of delay per day has been used to reflect the fact that many people were
not able to access work.
The value of travel time has been made on the basis that all
freight vehicles are on business time ($36.76/hour), and that passenger
vehicles are 50 percent business time ($36.76/hour) and 50 percent
non-business time ($11.49/hour). It is assumed that there is only one
passenger per vehicle. The value of truck freight time has been assessed
at $1.50 per pallet per hour, with 50 percent 'A' and
'B' vehicles on through trips, and 100 percent 'A'
vehicles on local trips. It is estimated that the profile of trucks
travelling through Rockhampton is 50 percent singles and 50 percent B
Doubles, with approximately 85 percent travelling loaded (personal
comment, John Bryant, Rocky's Own Transport). Loaded capacity is
estimated at 85 percent for through trips (assumes most trucks are
backloaded) and 50 percent for local trips (assumes no backloading).
The results indicate that the cost to the state economy from the
loss of through traffic is approximately $3.34 million per day, with
many of these losses expected to be directed to north Queensland. The
costs to the Rockhampton economy are approximately $0.59 million per day
for the loss of the through traffic to the Capricorn Coast, and $1.42
million per day for the closure of southern and western access to local
traffic. Total costs from the loss of road transport at Rockhampton are
estimated to be approximately $5.41 million per day.
These losses are sensitive to the assumptions about the lost travel
time involved. The time factors (72, 24 and 8 hours) are based on
approximate estimates of trip delays for the different groups. If only
missed travel time is considered (instead of time delays), then
estimates will be reduced by about a factor of three. This would reduce
the cost estimates for the road closure to approximately $1.8 million
per day.
A similar process has been used to estimate the value of travel
time costs for passengers and freight that was not able to be serviced
through the Rockhampton airport. The Rockhampton Regional Council (2011)
predicted that in 2010-11, there would be a total of 730,000 passenger
movements and 283,000 landed tonnes of freight. At a daily rate, the
corresponding estimates are 1,000 passengers making return trips and 775
tonnes of freight.
The loss of travel time has been assessed at 8 hours per passenger
(loss of one working day) and 5 hours per tonne of cargo (alternative
time to truck south from Mackay airport). The rate of travel time has
been assessed at the business hourly rate for both passengers and cargo.
Results show that the daily losses from the closure of the airport are
approximately $588,048 (Table 6).
6. DISCUSSION AND CONCLUSIONS
The focus of this study was on the economic costs of transport
corridor closures at Rockhampton in January 2011. Two approaches have
been used to make a simplified assessment of the economic impacts of the
road closures. The first was to model the proportional downturn in the
regional economy, using data from surveys and interviews with local
businesses to assess the proportional drop in business activity over the
period. The second was to apply the travel cost savings methodology used
to assess the costs and benefits of transport options in Australia. The
estimates of travel values for both passenger and freight vehicles used
in the Austroads (2011) methodology has been applied in this study.
The modelling of changes to economic activity indicate that the
change in regional production over the period of transport closures in
early January account for about $35 million in lost productive activity,
or about 0.77 percent of the regional economy. This is consistent with
economic impacts at the state level, where the joint impact of flooding
and Cyclone Yasi has been estimated to have reduced economic growth by
up to 2 percent (Queensland Government, 2011).
Assessing costs through the value of lost travel time approach
indicates that the cost to the state economy from the loss of through
traffic is approximately $3.34 million per day, with many of these
losses expected to be directed to north Queensland. The costs to the
Rockhampton economy are approximately $0.59 million per day for the loss
of the through traffic to the Capricorn Coast, and $1.42 million per day
for the closure of southern and western access to local traffic. The
results relating to the closure of the Rockhampton airport indicate that
the cost to the Rockhampton and state economy of lost travel and
diverted freight opportunities were approximately $0.59 million per day.
Total costs from the loss of road and air transport at Rockhampton are
estimated to be approximately $5.36 million per day.
With the road corridor closed for two weeks and the airport for
three weeks, the total direct costs can be assessed with the travel time
approach at $66.7 million for the road closure, and $13.5 million for
the airport closure, for a total cost of $80.2 million. Approximately
$47.5 million was due to the road closure limiting access between
southern and northern Queensland, while the remainder was a result of
impacts to Rockhampton caused by the local losses to road and airport
transport.
Several caveats should be noted with the analysis that has been
provided here. First, the estimates from the travel time savings
approach are dependent on the length of time assumed for each trip.
Further research is needed to help estimate the appropriate time in trip
interruptions for each travel group. Second, the two assessment
techniques employed in this research measure different economic
concepts. The changes to economic activity approach captures variations
in production in a regional economy, while the value of travel time
savings approach should measure economic surplus. The loss in regional
incomes (salaries and profits) is approximately 20 percent of a $35
million change in regional production, indicating that the travel time
approach used is generating inflated estimates of value. This may be
because travel delays or the value of travel time have been
overestimated. Reconciling these measures is another important topic for
further work. Thirdly, this study has not considered the potential for
resilience and rebound effects within Rockhampton. However, it was noted
that the lack of physical damage and limits to subsequent infrastructure
spending reduce some of the conditions for rebound effects identified by
Loayza et al. (2012).
Nevertheless, this study has important implications for future
regional planning and regional investment strategies. Resource
development is underpinning rapid economic growth in the central
Queensland region, and there is likely to be increased future investment
in infrastructure that minimises interruptions from climatic events.
Under global climate change projections, extreme events such as flooding
are likely to increase in both frequency and severity; with the outcome
that floods and similar events are likely to be treated as regular
events, rather than aberrations (Penning-Rowsell and Wilson, 2006).
Given the scale of economic impacts associated with these events as
described above, there is a need for climatic disasters to be
specifically included in regional economic development plans; and for
research such as this study to be used to help inform investments in
regional infrastructure.
ACKNOWLEDGEMENTS: This project was supported by research funds from
CQUniversity Capricorn Enterprise. Particular thanks go to Mary Carroll
(Capricorn Enterprise), Evan Pardon and Peter Priem (Rockhampton
Regional Council) and Vincent Garty (Queensland Department of Transport
and Main Roads) for helping to supply information and data. Additional
thanks go to Nicole Flint and Wilson Liu for work in the data collection
and review stages.
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John Rolfe
Central Queensland University, Centre for Environmental Management,
Rockhampton, Queensland, 4702, Australia.
Email: j.rolfe@cqu.edu.au
Susan Kinnear
Central Queensland University, Centre for Environmental Management,
Rockhampton, Queensland, 4702, Australia.
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Table 1. Cost of airport delays in Europe.
Percent of $/hour (2000 $/hour (2010
travellers values) values)
Low
Business 49 percent $47 $62.28
Personal 16 percent $28 $37.11
Tourism 35 percent $20 $26.50
Average $34 $45.06
High
Business 49 percent $63 $83.49
Personal 16 percent $33 $43.73
Tourism 35 percent $23 $30.48
Average $44 $58.31
Source: Institute of Air transport (2008).
Table 2. Gross Regional Product by industry at the Queensland,
statistical division and local government area level.
Rockhampton Fitzroy SD
LGA
Level ($m) Level ($m)
2008 09 2008 09
Agriculture, forestry & fishing 62.6 260.1
Mining 171.0 6,033.5
Manufacturing 384.3 1,005.1
Electricity, gas. water & waste 172.8 318.7
services
Construction 272.0 733.9
Wholesale trade 170.0 303.8
Retail trade 353.S 645.5
Accommodation & food services 170.8 318.1
Transport, postal & warehousing 525.8 1,074.6
Information media & 66.1 99.8
telecommunications
Financial & insurance services 116.4 188.5
Rental, hiring & real estate services 120.0 235.8
Professional, scientific & technical 111.8 246.1
services
Administrative & support services 70.9 151.1
Public administration & safety 281.4 462.1
Education & training 227.3 377.7
Healthcare & social assistance 353.5 534.0
Arts & recreation services 36.1 54.7
Other services 140.1 260.0
Inadequately described Not stated 41.8 99.1
Total Industry Factor Income 3,848.5 13,402.0
Total Employment
Ownership of dwellings 355.4 1,237.7
GRP at Factor Cost / Total Factor 4,204.0 14,639.7
Income ($m)
Taxes less subsidies on production 296.9 1,034.0
and imports
Statistical discrepancy (I) 86.8 302.1
Gross Regional Product ($m) 4,587.6 15,975.8
Queensland Rockhampton
employment
Level ($m)
2007 08
Agriculture, forestry & fishing 4,739 1,220
Mining 18,423 1,301
Manufacturing 19,174 2,780
Electricity, gas. water & waste 4,218
services 1,145
Construction 18,086 3,778
Wholesale trade 10.125 1,544
Retail trade 12,712 5,144
Accommodation & food services 6,835 3,274
Transport, postal & warehousing 14,343 2,623
Information media & 4,792 457
telecommunications
Financial & insurance services 14,154 890
Rental, hiring & real estate services 7,715 758
Professional, scientific & technical 11,107 1,466
services
Administrative & support services 4,949 1,013
Public administration & safety 11,943 2,947
Education & training 8,758 4,441
Healthcare & social assistance 12,894 5,019
Arts & recreation services 1,446 365
Other services 4.561 1,802
Inadequately described Not stated
Total Industry Factor Income 190,974
Total Employment 41,567
Ownership of dwellings 16,461
GRP at Factor Cost/Total Factor 207,435
Income ($m)
Taxes less subsidies on production 16,015
and imports
Statistical discrepancy (I) 0
Gross Regional Product ($m) 223,450
Source: the Authors. Note: GRP models supplied by Lawrence Consulting
Table 3. Counts of Businesses by industry division by employment size
ranges for Rockhampton, as at June 2011.
Total number of businesses
Large
\ SMEs businesses
Microbusinesses (5-199 (200+
Industry (0 4 employees) employees) employees)
A Agriculture. Forestry 1068 66 0
and Fishing
B Mining 41 24 0
C Manufacturing 16S 64 0
D Electricity, Gas, Water 24 3 0
and Waste Services
E Construction 1274 262 0
F Wholesale Trade 111 49 0
G Retail Trade 327 211 0
H Accommodation and Food 162 169 3
Services
I Transport, Postal and 530 57 3
Warehousing
J Information Media and 26 3 0
Telecommunications
K Financial and Insurance 380 28 0
Services
L Rental, Hiring and Real 666 62 0
Estate Services
M Professional, 466 116 0
Scientific and Technical
Services
N Administrative and 202 68 0
Support Services
Not Classified 1 117 3 0
O Public Administration 18 6 0
and Safety
P Education and Training 78 12 0
Q Health Care and Social 283 91 0
Assistance
R Arts and Recreation 74 21 0
Services
S Other Services 381 108 0
Total (All sectors) 6396 1423 6
Source: collated from ABS 8165.0--Counts of Australian Businesses,
including Entries and Exits, June 2007-June 2011.
Table 4. Daily value of lost traffic access from flood road closure.
Passenger Freight
vehicles vehicles
Through traffic, non-Rockhampton economy
Number 1,094 356
Hours of delay 72 72
Value of time lost/person/hour $24.13 $36.76
Value of track time lost per hour $1,560.60
Sub-total losses per day $1,899,906 $1,498,706
Through traffic, Rockhampton economy
Number 800 91
Hours of delay 24 24
Value of time lost/person/hour $24.13 $36.76
Value of track time lost per hour $520.20
Sub-total losses per day $462,888 $126,976
Local Traffic, Rockhampton economy
Number 8,064 1,862
Hours of delay 8 8
Value of time lost/person/hour $24.13 $36.76
Value of truck time lost per hour $72.00
Sub-total losses per day $370,624 $407,838
Total losses per day (all traffic types) $2,733,418 $2,033,520
Source: the Authors. Note: estimates of impacts on vehicle movements
from the road closure were valued by applying the rates of travel
time costs reported in Austroads (1997, 2003, 2011).
Table 5. Estimates of daily vehicle movements affected by flood road
closure.
Percent
Total heavy
vehicles vehicles
Group 1: Through traffic, non-Rockhampton
economy
North-south Bruce Highway 550 27.6
South-north Bruce Highway 430 27.6
West-north Capricorn to Bruce Hwy 290 20.4
North-west Bruce to Capricorn Hwy 180 14.6
Sub-total 1450
Group 2: Through traffic, Rockhampton economy
East-west Yeppoon Rd to Capricorn Hwy 195 6.2
East-south Yeppoon Rd to Bruce Hwy 205 6.2
West-east Capricorn Hwy to Yeppoon Rd 160 6.2
South-west Bruce Hwy to Yeppoon Rd 330 16.9
Sub-total 890
Group 3: Local Traffic, Rockhampton economy
Bruce Highway south 5,961 17.4
Capricorn Highway to west 3,965 20.8
Sub-total 9,926
Total 12,266
Passenger Heavy
vehicles vehicles
Group 1: Through traffic, non-Rockhampton
economy
North-south Bruce Highway 398 152
South-north Bruce Highway 311 119
West-north Capricorn to Bruce Hwy 231 59
North-west Bruce to Capricorn Hwy 154 26
Sub-total 1094 356
Group 2: Through traffic, Rockhampton economy
East-west Yeppoon Rd to Capricorn Hwy 183 12
East-south Yeppoon Rd to Bruce Hwy 193 13
West-east Capricorn Hwy to Yeppoon Rd 150 10
South-west Bruce Hwy to Yeppoon Rd 274 56
Sub-total 800 91
Group 3: Local Traffic, Rockhampton economy
Bruce Highway south 4,924 1037
Capricorn Highway to west 3,140 825
Sub-total 8,064 1862
Total 9,958 2,309
Source: the Authors
Table 6. Daily value of lost airport access from Rockhampton Flood
Closure.
Passengers Freight Totals
(tonnes)
Number 1,000 775.3
Hours of delay 8 5
Value of time $58 $32
lost/person/hour
Total economic losses per $464,000 $124,048 $588,048
day
Total economic losses over $10,672,000 $2,853,104 $13,525,104
closure period (23 days)
Source: the Authors
