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Business Interruption Impacts of a Terrorist Attack on the Electric Power System of Los Angeles: Customer Resilience to a Total Blackout

Adam Rose

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We estimate the direct and indirect economic impacts of an extended electric power outage caused by a terrorist attack in a major U.S. city--Los Angeles, California. Several simulations are run relating to damage to various components of the electric power system. Given the ability to target maximum damage, the simulations involve a two-week period until the system is fully restored. The analysis extends beyond the approaches prevalent in the recent literature, which have omitted resilience and indirect effects. The simulations are performed with the use of a computable general equilibrium (CGE) model that addresses these often omitted factors and incorporates special features relating to terrorism. The CGE framework has been successfully applied to electricity and water disruptions from natural hazards (Rose and Guha, 2004; Rose and Liao, 2005), as well as from technical/regulatory failures (Rose et al., 2004), and has several advantages over other approaches in being applied to utility lifeline disruptions from terrorist attacks (Rose, 2005).