Spatial Propagation of the Economic Impacts of Bombing: The Case of the 2006 War in Lebanon

The event of the Israeli bombing in Lebanon in the summer of 2006 is a unique example of a recent man-made disaster. The bombing actions were concentrated in time – they lasted roughly one month so that the time frame is still considered short in an economic modeling sense; they were also spatially focused – they reached not only various targeted infrastructure points across the country, but also scattered locations in the south of the country. Economic impacts of disasters caused by natural or man-made hazards are complex and difficult to assess and evaluate, due to the features and uniqueness of disasters; however, some methodologies have been utilized to analyze their impacts. This paper aims to evaluate the short run economic effects of the July 2006 War using an interregional CGE model for Lebanon. We look at the economy of the country just before the War and estimate what would be the hypothetical economy-wide impact had the Lebanese regions faced a reduction of physical capital stocks in the same magnitude of the estimated damages associated with the bombing events. In doing that, we are able to derive the estimates of the economic costs of the war related to the structural break in the availability of economic infrastructure in the country. A discussion on resiliency is also introduced.