Economic impact of security threats

Economic impact of security threats

Crime and terrorism are a major part of every European society. The types of costs and economic effects of crime and terrorism are widely varried and will be referred to as economic impact of security threats.

The Relevance for Urban Planners

• The costs and effects of crime touch just about everyone to some degree. The ultimate cost of crime is the loss of life, but other major costs to victims of crime include medical costs, property losses, and loss of income.

• After a big terrorist event, one can read frequently about the economic damage of the event on the local economy such as after the London Bombings in 2005 or the September 11 attacks in New York. Due to the significant costs and effects of terrorism, knowledge about this theme is of major relevance for any urban planner.

Put differently, the economic impact of security threats (crime & terrorism) can be significant and explains why economists and related scholars increasingly analyzed the economic impact of crime and terrorism.

Groups of economic impact of security threats

According to Krugman (2004), the economic impact of terrorism is similar to the economic impact of crime, and can be divided into three groups:

1. The direct economic impact performed by criminal and terrorist acts on the urban object/environment (buildings and infrastructure destroyed, productive lives ended).
2. The indirect economic impact (on the urban environment) such as effects on tourism, investments, consumption, trade, etc.).
3. Budget effects of preventive security measures against crime and terrorism such as money spent on national defense, airport security, and the police, in an attempt to prevent or forestall future criminal and terrorist events.

It is important to realise for urban planners that crime and terrorism do not only lead to direct physical costs and preventive measures, but also generate less tangible costs that are not easily or precisely identified, but can be of major importance for the local economy. This will be further explained on the specific pages (see above).

Related subjects

The economic impact of security threats are closely related to:

• belongs to::Economic impact
• The is synonymous to::economic effects of security measures
• The economics of terrorist and criminal behaviour

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