Executive Summary

Protecting people, the built environment, and the nation’s economy from the effects of devastating earthquakes has been the focus of scientific and engineering endeavor for more than 100 years. The need for such protection has never been greater—approximately 30 percent of the population (75 million people) and 50 percent of the national building stock ($8.6 trillion) are located in areas prone to damaging earthquakes. Annualized building and buildings-related earthquake losses in the United States are estimated to be more than $5.6 billion per year, with a single significant earthquake having the potential to cause losses of more than $100 billion.

Members of many professions are actively seeking to understand and mitigate the consequences of major earthquakes—earth scientists focus on understanding the source and nature of the strong shaking and defining the hazard, block by block, to our cities; structural engineers and their design professional colleagues work to determine the optimum ways to mitigate damage and endeavor to design their structures appropriately; economists and policy analysts focus on determining the appropriate framework for evaluating the benefits and cost-effectiveness of implementing various mitigation measures, including improved seismic monitoring; insurance professionals and their loss estimation consultants work to determine the expected dollar losses that could occur and provide risk mitigation products to share the cost of damage; and the emergency management community defines scenario events and plans, practices, and assists with recovery from earthquake disasters. All of these professions are users of information derived from seismic monitoring.



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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty Executive Summary Protecting people, the built environment, and the nation’s economy from the effects of devastating earthquakes has been the focus of scientific and engineering endeavor for more than 100 years. The need for such protection has never been greater—approximately 30 percent of the population (75 million people) and 50 percent of the national building stock ($8.6 trillion) are located in areas prone to damaging earthquakes. Annualized building and buildings-related earthquake losses in the United States are estimated to be more than $5.6 billion per year, with a single significant earthquake having the potential to cause losses of more than $100 billion. Members of many professions are actively seeking to understand and mitigate the consequences of major earthquakes—earth scientists focus on understanding the source and nature of the strong shaking and defining the hazard, block by block, to our cities; structural engineers and their design professional colleagues work to determine the optimum ways to mitigate damage and endeavor to design their structures appropriately; economists and policy analysts focus on determining the appropriate framework for evaluating the benefits and cost-effectiveness of implementing various mitigation measures, including improved seismic monitoring; insurance professionals and their loss estimation consultants work to determine the expected dollar losses that could occur and provide risk mitigation products to share the cost of damage; and the emergency management community defines scenario events and plans, practices, and assists with recovery from earthquake disasters. All of these professions are users of information derived from seismic monitoring.

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty The advances made by each of these professions depends on basic scientific research, on applied research founded on a clear understanding of what has happened after each earthquake, on collaboration to determine how best to improve the processes they use, and on education to disseminate best practices to all practitioners in each profession. The significant advances that have been made over the past 50 years have been aided by the availability of seismic monitoring data—records of earthquake events recorded by weak and strong motion instruments. All components of the built environment—buildings, bridges, roads, utility networks, and dams—share in the benefits. The records obtained have contributed to seismic hazard maps, to building codes and loss estimation programs, and to innovative emergency response tools that graphically display the areas subject to greatest damage. In this process, it has become clear that earthquakes are very complex phenomena, each one leaving a different signature of ground shaking that varies in intensity and characteristics depending on location, ground conditions, type and geometry of faulting, and magnitude. Seismic monitoring holds the key to understanding both the seismic hazard and the response of the built environment so that proper preparations can be made for the future. However, despite the widely appreciated benefits of seismic monitoring data, we currently have in place only a fraction of the modern instruments needed to capture the essence of the earthquakes that are occurring. In fact, over the last 30 years in the United States, a number of opportunities have been missed to record events, yield new insights, and eventually reduce the cost of earthquakes. The Advanced National Seismic System (ANSS) is envisioned as a state-of-the-art network of seismic monitoring instruments that will provide data on both earthquake occurrence and infrastructure response to earthquake ground shaking. The national benefits of such a system are easy to appreciate from a qualitative perspective; however, the benefits are inherently very difficult to quantify in terms of dollars “saved” or losses avoided. The ANSS was proposed by the U.S. Geological Survey (USGS) in 1999 and was endorsed by Congress in 2000 with the passage of Public Law 106-503. To the broad community with responsibility for reducing the effects of damaging earthquakes, this proposal represented a major step forward that would eventually lead to significant improvements in hazard assessment, structural engineering, loss estimation, and emergency management. The past several decades have seen increased requirements from funding organizations for scientists to demonstrate not only that they are engaged in adding to the body of scientific knowledge, but also to demonstrate that scientific endeavors will ultimately provide tangible—and preferably quantifiable—economic benefits to the nation. It is in this context

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty that the U.S. Geological Survey—the federal organization charged by Congress with monitoring natural hazards and providing natural hazard warnings—requested that the National Research Council (NRC) assess the economic benefits of improved seismic monitoring. The NRC committee was charged (Box ES.1) to give particular emphasis to the USGS plans for deployment of modern seismic monitoring instrumentation—the Advanced National Seismic System—predominantly in those urban areas that are most at risk from earthquake losses. The committee heard presentations from a wide variety of experts and interested parties during its information-gathering meetings—from federal agencies, state agencies, local jurisdictions, private companies, and the academic community. During its deliberations, the committee grappled with understanding the extremely broad range of benefit types and with the variability in the degree to which the economic benefits of seismic monitoring can be proven and quantified. The committee recognized that there is a range of economic benefits that are extremely difficult or even impossible to quantify (e.g., assessing the value of reduced anxiety). Ultimately, the committee concluded that a compilation and description of BOX ES.1 Statement of Task An NRC ad hoc committee will provide advice regarding the economic benefits of improved seismic monitoring, with particular attention to the benefits that could derive from implementation of the Advanced National Seismic System (ANSS). In particular, the committee will: Review the nature of losses caused by earthquakes. Examine how improved information from seismic monitoring systems could reduce future losses in a cost-effective manner, taking into consideration the major impact-reduction approaches (for example, hazard assessment, building codes and practices, warning systems, rapid response, and insurance). Assess the capabilities for loss reduction provided by existing seismic monitoring networks, and identify how the ANSS and any other new monitoring systems would improve these capabilities. Describe concepts and methods for assessing avoided costs (both direct and indirect) that would result from improved seismic monitoring. To the extent possible, provide an estimate of the potential benefits that might be realized from full deployment of the ANSS.

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty the broad range of potential benefits—quantified where possible—would be the most appropriate and useful response to this aspect of its charge, recognizing that a base level of research and information is required before a rigorous and fully quantified estimate of potential benefits can be made. The development of successful risk management strategies for earthquake hazards requires that the benefits from reduced uncertainty provided by improved seismic monitoring are integrated with the factors that influence risk perception and choice. The extent to which information from seismic monitoring networks can be used to reduce losses from future earthquakes depends, to a large degree, on providing this information to decision-makers and other end-users in an appropriate form, and on the extent to which these individuals and groups understand and make use of the information. With appropriate information, decision-makers—including public sector agencies, lenders, engineers, builders, insurers—can develop effective mitigation strategies to reduce the impacts of low-probability, high-loss earthquake events. Reducing the uncertainties in both the hazard and the risk through improved monitoring and research, and enabling policy-makers to gain an improved understanding of these uncertainties, also has considerable potential for improving the efficiency of emergency response planning and mitigation activities. The potential benefits from improved seismic monitoring are quite varied. An important role of seismic information is to improve the accuracy (i.e., reduce the uncertainty) of building damage predictions and loss estimates, as the basis for more effective loss avoidance regulations, as well as enabling more effective emergency preparedness activities and improved earthquake forecasting capabilities. Each earthquake provides a unique opportunity to learn. Improved monitoring of future earthquakes will lead to a more complete understanding of geophysical processes, more effective hazard mitigation strategies, and improved emergency response and recovery. As with all projects designed to reduce losses from natural disasters, the ANSS is expected to provide benefits in the form of avoided losses. Consequently, the costs of earthquake damage to the nation—without mitigation measures based on data and information provided by the ANSS—must form the benchmark against which the prospective benefits are assessed. Losses or costs associated with earthquakes fall into five major categories—direct physical damage (to buildings and infrastructure), induced physical damage (including fires, floods, hazardous material release, etc.), human impacts (death and injuries), costs of response and recovery (including first-responder and building inspection costs, etc.), and business interruption and other economic (social and environmental costs, etc.) losses. The most recent estimate of annual earthquake losses in the United States by the Federal Emergency Management Agency (FEMA)

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty was $5.6 billion per year for buildings and building-related costs (after adjustment to 2003 dollars; building-related direct economic losses include repair and replacement costs for structural and nonstructural components, building content loss, business inventory loss, and direct business interruption losses), with a single significant earthquake potentially causing losses greater than $100 billion. Although concentrated on the West Coast, the risk of significant earthquake loss applies to many areas of the country. In recognition of the magnitude and extent of potential losses: The United States should rank arresting the future growth of seismic risk and reducing the nation’s current seismic risk as highly as other critical national programs that need persistent long-term attention, and it should make the necessary investment to achieve these goals. Our understanding of the nature of earthquake hazards in the United States—the distribution, frequency, and severity of damaging ground shaking—is based on past damaging earthquakes as well as on the tens of thousands of small earthquakes that occur throughout the nation each year. Improved seismic monitoring networks will provide the basis for better characterization of this seismicity, so that the ground motion prediction models that underpin building codes and earthquake engineering design—the basis for safeguarding life and property—can more accurately reflect the complex nature of the hazard. In addition, any potential for the future prediction of damaging earthquakes will rely in part on seismic monitoring data. Estimates of the extent of likely damage and the socioeconomic consequences from earthquakes are based on loss estimation models, which combine seismic hazard and vulnerability models with inventories of the built environment. Loss estimation models are contained in commercial software packages and in publicly available models, the most widely known and used in the latter category being the HAZUS model. HAZUS is a standardized, nationally applicable multihazard loss estimation methodology for estimating the impacts of disasters for the purposes of risk mitigation, emergency preparedness, and disaster recovery. All loss estimation models share a common structure—they are based on an estimate of the severity of the earthquake hazard, coupled with engineering estimates of the damage and loss to the infrastructure inventory in a particular region. In some loss model applications, the frequency of the hazard is also considered in order to provide the end-user with probabilistic loss estimates rather than scenario loss estimates. Output from the models typically includes the amount of expected damage to the built environment, economic costs of that damage (including business interruption

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty costs), and estimates of injuries and deaths. Loss estimation models are used by insurers and reinsurers, government agencies, private businesses, the engineering community, and others. Improved seismic monitoring will enhance the accuracy of the data underpinning loss estimation models and reduce the uncertainty associated with model outputs. The benefits from improved loss estimation model outputs include increased public knowledge, confidence, and understanding of seismic risk; better correlation between seismic risk and building code and land-use regulations; more efficient use of insurance to offset losses from disasters; and more accurate determination of the nature and growth of seismic risk in the nation. In addition, information about new and rehabilitated buildings and infrastructure, coupled with improved seismic hazard maps, will allow policy-makers to track incremental improvements in seismic safety through earthquake mitigation programs. Improved earthquake hazard assessments combined with more accurate loss estimation models—both dependent on improved seismic monitoring—offer significant benefits for emergency response and recovery. These benefits include rapid and accurate identification of the event, its location and magnitude, the extent of strong ground shaking, and estimates of damage and population impacts. This information expedites hazard identification, promotes rapid mobilization at levels appropriate to the emergency, and facilitates the rapid identification of buildings that are safe for continued occupation and those that must be evacuated. These are tangible benefits to the emergency management community, and ultimately to residents of seismically active regions of the country. Although difficult to quantify, the ultimate benefits are lives saved, property spared, and human suffering reduced. The integration of HAZUS loss estimation capabilities and USGS earthquake hazard information should be continued to track the growth of seismic risk in the United States, thereby further reducing the uncertainty associated with seismic risk. The guidelines, standards, and codes available to earthquake engineers for the design of new structures and the rehabilitation of existing structures hold promise for protecting lives and the built environment against the largest expected earthquakes. However, perceptions that the up-front cost of mitigating the risk of earthquake damage is too high—combined with skepticism concerning the likelihood of earthquake occurrence, particularly in areas that have not experienced damage in historical time—leaves the country in a state of increasing seismic risk with the rapid expansion of the built environment. In order to make significant advances in arresting the growth of seismic risk, new analysis and design techniques

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty are needed to better accommodate the expected ground motion. Current engineering design guidelines are mostly based on field observations that result in generalized and conservative procedures for controlling damage. The recent excellent performance of buildings where motion has been recorded provides a reasonable expectation that new techniques can be developed that will reduce the cost of seismic safety to more affordable levels. Seismic monitoring records hold the key to understanding how the built environment responds to significant earthquakes, and improved records offer the potential for fine-tuning the design process so that seismic safety requirements are adequately—but not excessively—met. Determining the value of information has always been a challenge—it is not a tangible commodity and its benefits are often very subtle. Additional specific limitations apply to seismic monitoring information where the positive result of the information is avoided loss (e.g., in retrospective studies, it is difficult to isolate the contribution of seismic monitoring from other factors that influence the reduction in earthquake losses). Nevertheless, public policy decisions generally have to be made despite such limitations. The relative gains provided to society by improved monitoring information can be measured by the economic value of reduced decision uncertainty, assessed by comparing actions to be taken to manage the risks with and without improved monitoring. It is possible, by using a series of assumptions, to determine a “ballpark” figure for earthquake losses that could be avoided by using improved seismic monitoring information as the basis for implementing improved performance-based earthquake engineering design. These assumptions relate to the value of the built environment within the United States, the cost of seismic rehabilitation and the number of existing buildings that need strengthening, and the annual expected loss from earthquakes compared with reduced losses when higher seismic design standards based on information from improved monitoring are applied. These calculations indicate a total loss avoided of more than $140 million per year, based on an estimate of reduced earthquake losses together with estimates of savings in construction costs that would accrue from the implementation of performance-based engineering design in those regions where improved seismic monitoring indicates that seismic design standards can be reduced. Although it is possible to compile qualitative descriptions of the existing uncertainties and the potential economic benefits of improved seismic monitoring, there is insufficient existing research and information to provide a full quantitative assessment of such benefits. In effect, a certain level of seismic monitoring information—to be provided by the monitoring proposed for the ANSS—will be required before rigorous quantitative determination of the benefits can be made. The extent of the assumptions

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty required to make the ballpark calculations for performance-based engineering design emphasizes the need for additional quantitative information before more precise estimates of the economic benefits of seismic monitoring can be determined. After every damaging earthquake in the United States, data gathering and applied research should be sponsored—as a collaborative activity among the National Earthquake Hazards Reduction Program (NEHRP) agencies—to document how seismic monitoring information reduced uncertainty and provided economic benefits in both the long and the short term. Comprehensive reports should be published within one year after the event for short-term benefits, and within 10 years after the event for intermediate- and long-term benefits. The relatively modest funding required to achieve a significant improvement in seismic monitoring capabilities should be considered in light of the potential for reducing the cost of constructing new facilities, strengthening existing structures to achieve proper performance, and avoiding losses from major damaging events. The approximately $200 million investment required for improved seismic monitoring infrastructure should be considered from the perspective of the more than $800 billion invested annually in building construction, the $17.5 trillion value of existing buildings in the United States, and the possibility of a $100 billion plus loss from a single, major earthquake in an heavily populated urban environment. After assessing the considerable range of potential economic benefits from improved seismic monitoring that will be provided by full implementation of the ANSS, the committee concludes: Full deployment of the ANSS offers the potential to substantially reduce earthquake losses and their consequences by providing critical information for land-use planning, building design, insurance, warnings, and emergency preparedness and response. In the committee’s judgment, the potential benefits far exceed the costs—annualized buildings and building-related earthquake losses alone are estimated to be about $5.6 billion, whereas the annualized cost of the improved seismic monitoring is about $96 million, less than 2 percent of the estimated losses. It is reasonable to conclude that mitigation actions—based on improved information and the consequent reduction of uncertainty—would yield benefits amounting to several times the cost of improved seismic monitoring.