Recuperation of economy after volcanic eruption in Mt. Merapi, Indonesia: a multiregional input-output analysis
Abstract Indonesia is in one of the disaster-prone points, the ring of fire, which frequently suffer from natural disasters. Mt. Merapi volcanic eruption in 2010 was one of the catastrophic natural disasters, which caused the approximate economic damages of 3,628 trillion Indonesian rupiah. To recover the loss of different sectors of the economy, the central and regional governments allocates special budget for recovery and reconstruction. We assess the induced economic effects of Mt. Merapi eruption recovery fiscal support by using a multiregional input-output (MRIO) model. We utilize the state level data of the 2005 Indonesian interregional input-output table (IRIO) and the 2011–2013 volcano eruption restoration. Our results indicate that the effect of 2010 recovery budget for Mt. Merapi eruption contributed to the economy of the hazard-affected Yogyakarta Special Region. In addition, the forestry sector, other services sector, and construction sectors have a significantly benefited from the induced output by fiscal support.