Evaluating the impacts of earthquake disasters on the building construction sector: a SARIMA-based counterfactual analysis

Abstract

Disasters have a dual effect on the construction industry. While their initial impact disrupts construction activities, the resulting damage also stimulates construction demand. Existing scholarly literature predominantly adopts qualitative approaches in examining the impacts of disasters on the sector. This study introduces a quantitative methodology to assess the impacts of disasters on building construction activity. Utilizing counterfactual time series analysis, trajectories of the construction sector in the absence of disasters are simulated and subsequently compared with actual observed trajectories. Building consent datasets were obtained from Statistics New Zealand and time series analysis was employed to investigate the effect of the Canterbury and Kaikoura earthquakes on the building construction sector, examining impacts at both national and regional levels. The findings reveal that the Canterbury earthquake had a significant national impact, initially decreasing construction activity but subsequently leading to more rapid growth in the medium to long term than anticipated. In contrast, the Kaikoura earthquake's impact was largely confined to the Canterbury region, slowing the local building construction sector. This study highlighted the usefulness of counterfactual time series analysis in assessing the impacts of disasters on the construction sector, and its findings are useful for simulating the impacts of disasters and other shocks in forecasting future trajectories of the sector.