What question did this study set out to answer?

This research aims to explore the economic impacts of volcanic disruptions on the Kawerau District's value chains.

April 19, 2026International Journal of Disaster Risk Reduction0 citationsOpen Access

Tracing Cascading Economic Impacts of Volcanic Disruption through Regional Value Chains: Implications for Disaster Risk Reduction

DGDuncan Grimson MBMark Bebbington GMGarry McDonald

Key Points

This research aims to explore the economic impacts of volcanic disruptions on the Kawerau District's value chains.
Used a stepwise MRIO tracing framework to analyze disruptions.
Examined input dependencies and market linkages in regional supply chains.
Conducted scenario analysis on forestry supply reduction and resilience strategies.
Simulated 50% reduction in forestry supply leads to NZD 37.5 million output shortfall in paper manufacturing.
10% input buffer prevents NZD 21.9 million in cascading losses; 20% buffer avoids NZD 43.9 million.
Significant reliance on forestry inputs and international export markets identified.

Abstract

Volcanic eruptions pose significant risks to regional economies by disrupting local industries and their interdependent supply chains. This study examines the cascading economic consequences of a volcanic disruption scenario in the Kawerau District of New Zealand’s Bay of Plenty, a nationally significant hub for paper manufacturing. Extending the stepwise MRIO tracing framework of Patterson et al. (2011), this study integrates both upstream input dependencies and downstream market linkages to trace cascading disruption pathways across regional value chains. The analysis reveals the region’s strong reliance on forestry inputs and international export markets. A simulated 50% reduction in forestry supply corresponds to an estimated output shortfall of NZD 2020Q1 37. 5million (6. 4%) in the Kawerau Paper manufacturing sector, with impacts propagating through national and global value chains. Scenario analysis shows that targeted resilience measures, such as inventory stockpiling, can substantially mitigate these cascading losses. A 10% forestry input buffer avoids approximately NZD 2020Q1 21. 9million in upstream cascading losses, while a 20% buffer avoids NZD 2020Q1 43. 9million relative to the no-inventory case. By linking volcanic hazard context with network-based economic modelling, this study provides an operational framework for assessing systemic risk and identifying leverage points for resilience investment, offering practical insights for strengthening preparedness in hazard-prone regional economies.

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