Measuring the impacts of natural hazards is a fundamental step and a necessary condition to enable efficient decisions, including those around resource allocation, to assist in progressing national capability in recovery and making communities more resilient. Insurance only covers part of the losses in an adverse event. Traditionally, estimates of economic losses focus on the financial cost of, and insurance payouts for, what has been or would be destroyed in a given event scenario. In this paper a framework is developed that can be used to estimate both the direct and indirect costs using a computable general equilibrium (CGE) model. Indirect costs are those that do not arise from the immediate destructive impact of the event but are conditional upon these. Examples of indirect costs include business interruption of businesses whose suppliers are directly impacted, or reductions in tax receipts received or numbers of tourists visiting the area. 

The CGE model enables the interdependencies and linkages across the various sectors and regions of the Australian economy affected by a natural disaster event to be identified. By evaluating the distributive effects of these relationships we can determine the winners and losers at different levels (sectorial, business, household and geographic) throughout both the affected region and general economy. From this, effective actions can be taken to speed up the recovery process. In addition they provide an indication of the recovery elements, such as supply choke points, which may restrict the rebuilding and restoration effort. At present there is no generally available model or set of tools that can model the economic recovery costs of a natural disaster event in Australia. This framework addresses this gap and will provide extensive evidence for prioritising interventions, risk mitigation measures (especially where lifelines are concerned) and risk management.