The indirect economic effects of a terrorist attack on transport infrastructure: a proposal for a SAGE

After the terrorist attack on the World Trade Center in New York on 11 September 2001 there is an increased fear of terrorism. The transport sector seems to be a main target for terrorism. Not only air‐traffic, but also main traffic junctions such as tunnels and bridges may be possible targets of terrorists. The horrific attacks on several trains in Madrid in 2004, illustrate ones more the credibility of these threats. This paper addresses the question how to measure the indirect effects of a terrorist attack on transport infrastructure via an increase in transport costs, and discusses a approach how a government may find the economically most vulnerable links in the infrastructure network. It is proposed to use a spatial applied general equilibrium model in the new economic geography tradition to measure the indirect economic effects.