A study recently published in Risk Analysis Journal, evaluates the financial impact of volcanic eruption alerts on the local communities.
Volcanic alert systems have been highly developed over the past years providing detailed information over the course of a potential eruption. Such systems utilize computer modeling, in-situ monitoring, observations and data analysis to provide information and predict the eruptive phase of a volcano.
Nonetheless, there is an economic impact associated with the operation of such systems that has not been widely taken into consideration. The idea suggests that, even if a volcanic explosion does not occur, the activation of the alert systems has severe financial and social ramifications.
To put this concept to test, the authors of the study assessed financial indexes including residence prices and business prosperity in regions where volcanic alerts are very high. Those were: 1. Mount St. Helens in Washington State, 2. Kīlauea region in Hawaii and 3. Long Valley Caldera in California.
The volcanic alerts are characterized by the VAL (Volcanic Alert Level) system which was standardized in 2006 by the United States Geological Survey (USGS) or other systems that were developed before VAL. The systems are triggered when signs of volcanic activity (e.g., earthquakes, carbon dioxide emissions, ground deformation, etc.) emerge.
Scientists analyzed economic data and correlated them with volcanic alerts from 1974 to 2016. In particular, the analysis evaluated the house pricing, the number of business openings in a certain region and the relative proportion and salaries of employees in the aforementioned areas. The results showed that, in all case studies, the alerts caused a negative financial impact in the local communities in businesses and house prices in the short term.
The study focuses on the economic complexity of living in regions with high volcanic activity. The team suggests that a volcanic eruption is a major threat but also the psychological factors associated with the singularity of those regions shape the financial background.
The authors of the study suggest that a major issue concerning the U.S. Federal Government policy regarding the affected regions emerges. The current policy compensates citizens in case of a direct natural disaster such as an actual volcanic eruption, earthquakes, tsunamis and floods. However, there are no funds dedicated to people affected by the indirect, short-term impact of volcanic alerts. The study also emphasizes the similarity of the aforementioned natural disasters with the volcanic alerts' effect in terms of economic impact.
Nevertheless, the pattern was not similar in the long term. In particular, it was found that, under certain circumstances, a positive gain can be derived in regions with high volcanic alerts. The case study of Mount St. Helens showed that the region became a volcanic tourist attraction and the local economy was boosted.
Sources: Peers et al., 2021, SocietyforRiskAnalysis
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