FIGURE 1.3 Current annualized earthquake losses (AEL) in millions of dollars, estimated by the Federal Emergency Management Agency (FEMA) on a county-by-county basis using the HAZUS method. Twenty-four states have an AEL greater than $10 million. The total AEL estimated for the entire United States is about $4.4 billion. SOURCE: FEMA, HAZUS 99 Estimated Annualized Earthquake Losses for the United States, FEMA Report 366, Washington, D.C., 33 pp., February 2001.

The prediction of losses from future natural disasters is notoriously uncertain (4), but more accurate projections are being established with better technical input from earthquake science, engineering, and economics. Scenarios constructed using loss estimation tools have begun to quantify the magnitude of the risk that now faces large population centers in earthquake-prone regions. According to a 1995 report (5), a repeat of the 1906 San Francisco earthquake would likely result in a total loss of $170 billion to $225 billion (in 1994 dollars). The comparable loss for the 1994 Northridge earthquake, the costliest U.S. disaster on record, was about five times lower. The direct losses in a repeat of the 1923 Kanto earthquake, near Tokyo, would truly be staggering—$2 trillion to $3 trillion— and the indirect economic costs could be much higher (6). Nevertheless, much of the Pacific Rim and other earthquake-prone regions are urbaniz-

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