Economic impact of the 1998 ice storm on the Eastern Ontario maple syrup industry

Abstract

Partial equilibrium analysis was used to characterize the economic impact of the 1998 ice storm on the maple syrup industry in Eastern Ontario. Stochastic simulation is used to generate interval estimates of damages. We compare government expenditures on assistance programs to the estimated industry losses. Total losses to the industry in terms of changes in producers' surplus and capital losses for the baseline scenario were estimated to be $5.5 (± $0.5) million. Extensive sensitivity analysis was conducted. Losses were estimated to be $4.7 (± $0.4) million if recovery takes place faster than in the baseline scenario. Losses were estimated to be $7.1 (±$0.4) million when recovery takes longer than in the baseline case. Direct government expenditures on ice storm assistance programs to this industry were approximately $7.3 million. The relevance of this type of analysis to the development of natural disaster relief policies is discussed.