Potential Economic Effects Today of a 1964 Magnitude Tsunami

If a 1964 magnitude tsunami occurred today, the State of Alaska would lose its most important revenue and tax base. That is, the State could potentially lose income and revenue to the value of US$23.8 billion in the year 1999-2000. This could be quite disastrous since the State would need maximum revenues to provide Federal assistance in the relief, repair and reconstruction phases following the disaster. As a country, the United States would lose 25% of its total requirements as supplied by the Alaskan oil fields. As such, it is expected that the United States would need to import this oil from foreign suppliers and this would drive up global oil prices thus having a macroeconomic effect.

The effects would be worse felt in the following industries:

TABLE 2.

POTENTIAL ECONOMIC IMPACTS IN US$ OF A 1964 ALASKA EARTHQUAKE TSUNAMI EVENT IN 1999

Gross State Product (1999 - estimated*)	27,000,000,000
Economic Sector Contributions
Oil Industry	22,950,000,000
Sea Food Industry	1,000,000,000
Tourism	1,000,000,000

*Data derived from Alaska Economic Trends Monthly Bulletins (1997-1999) available at:

http://www.labor.state.ak.us/research/research.htm and http://www.dced.state.ak.us

Table 2 provides the current estimate for gross state product (GSP) for Alaska for 1999 and the contribution made to this figure by the three main economic sectors. From this information it can be seen that 85% of Alaska's GSP will be derived from oil industry revenues. The vast majority of oil/petroleum/gas products are refined, processed, stored and then transported from facilities located at major harbour and port docks on the coast (and susceptible to the type of damages incurred in 1964). Consequently, if a tsunami of the same magnitude as the 1964 event were to occur in 1999, it is highly probable that it would have a massive destructive effect on coastal harbour facilities and as a consequence, the oil industry. Such destruction of the oil industry's coastal facilities and subsequent loss of revenue could have a crippling effect on the economy of Alaska. Such an impact would have a commensurate effect on the insurance industry with significant claims being made for marine and property insurance damage and loss, as well as, loss of business and business interruption claims.

• Oil
  
• Tourism
  
• Fishing
  
• Insurance