8
Integrating the Benefits—Conclusions and Recommendations

What does all the benefit information tell us? First, what is a relevant benchmark for examining whether the potential benefits from additional seismic monitoring can be justified given the anticipated costs of this investment? Annual costs for operating and maintaining the nation’s existing seismic monitoring networks, including the present implementation of the federally operated network (the Advanced National Seismic System [ANSS]) and the plethora of state, university, and private networks, amount to approximately $31 million, although this is augmented by as-yet-unquantified state and local support. Costs for the seismic monitoring components of EarthScope—the permanent USArray additions to the national “backbone” as well as Plate Boundary Observatory (PBO) seismometers—amount to $4.9 million for hardware purchase and installation, with annual operations and maintenance (O&M) costs as yet unspecified (estimated at $1.5 million).

The expected capital expenditures for expansion and modernization of strong motion capabilities as part of the full ANSS proposal are slightly greater than $171 million, and expected annual operating costs—once the network is fully installed—are almost $47 million (in 1999 dollars) (USGS, 1999). In 2003 dollars, the equivalent amounts would be $189 million and $52 million, respectively. In total, capital expenditures for improved seismic monitoring (omitting costs for existing networks) amount to $194 million, with annual O&M costs of approximately $53 million. As is true for any project, these forecasts must be carefully hedged, and it is likely that actual annual expenditures will follow a path that reflects higher outlays in the early years—when construction and acquisition of the monitoring



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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty 8 Integrating the Benefits—Conclusions and Recommendations What does all the benefit information tell us? First, what is a relevant benchmark for examining whether the potential benefits from additional seismic monitoring can be justified given the anticipated costs of this investment? Annual costs for operating and maintaining the nation’s existing seismic monitoring networks, including the present implementation of the federally operated network (the Advanced National Seismic System [ANSS]) and the plethora of state, university, and private networks, amount to approximately $31 million, although this is augmented by as-yet-unquantified state and local support. Costs for the seismic monitoring components of EarthScope—the permanent USArray additions to the national “backbone” as well as Plate Boundary Observatory (PBO) seismometers—amount to $4.9 million for hardware purchase and installation, with annual operations and maintenance (O&M) costs as yet unspecified (estimated at $1.5 million). The expected capital expenditures for expansion and modernization of strong motion capabilities as part of the full ANSS proposal are slightly greater than $171 million, and expected annual operating costs—once the network is fully installed—are almost $47 million (in 1999 dollars) (USGS, 1999). In 2003 dollars, the equivalent amounts would be $189 million and $52 million, respectively. In total, capital expenditures for improved seismic monitoring (omitting costs for existing networks) amount to $194 million, with annual O&M costs of approximately $53 million. As is true for any project, these forecasts must be carefully hedged, and it is likely that actual annual expenditures will follow a path that reflects higher outlays in the early years—when construction and acquisition of the monitoring

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty equipment occur—compared with later years when most of the costs will be for operations and maintenance. Similarly projections of benefits are likely to increase over time as practitioners learn to make the best use of data generated by improved seismic monitoring. Because it is difficult to make plausible forecasts of the costs and benefits over the relevant future time horizon, we can proceed by considering a prototypical year. First, based on a presumed 10-year life for the new equipment, the annual costs would be the annualized equivalent of $194 million plus the annual $53 million annual O&M costs. This annual combined cost comes out to $96 million.1 Second, what amounts of benefits are needed to justify these expenditures? The Federal Emergency Management Agency (FEMA, 2001a) reported that the expected annualized building-related earthquake losses to U.S. society are $4.4 billion. These figures include the repair and replacement costs for structural and nonstructural components, building content loss, business inventory loss, and direct business interruption loss. Based on the Consumer Price Index, these estimates were converted to 2003 dollars to give an annualized earthquake loss of $5.6 billion. FEMA’s studies are conservative in that they do not include losses to utility and transportation systems, the costs of loss of life and injury, or indirect business interruption costs. Although other studies have estimated earthquake losses to be higher (e.g., Gordon et al., 2004), FEMA’s more conservative estimates can be used here to evaluate whether the potential benefits can justify the anticipated improved seismic monitoring costs. If they pass this test with FEMA’s data, then the investment will be even more attractive when compared with estimates from other more comprehensive studies. One way to proceed with this discussion of whether the anticipated economic benefits from improved seismic monitoring justify the cost to the nation is to ask how large a reduction in expected annual earthquake losses would be required to justify the investment in improved seismic monitoring. Using the FEMA estimates of annualized buildings and building-related earthquake losses of $5.6 billion, if an annual 2 percent reduction in losses resulted from mitigation measures based on improved seismic monitoring data—a seemingly achievable result in light of the broad range of potential benefits described in this report—then avoided losses would be greater than the maximum expected annual costs of investing in increased seismic monitoring. A brief recap of the benefits elaborated in earlier chapters suggests that the investment in improved 1   The annual opportunity cost of $194 million (4 percent cost of capital at 10 years) is approximately $24 million and the annual (straight-line) depreciation cost is approximately $19 million.

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty seismic monitoring should easily meet the efficiency (positive net benefit) hurdle. SUMMARY OF BENEFIT COMPONENTS A broad range of potential benefits of improved seismic monitoring is described in Chapters 4-7. These can be summarized in three categories—benefits that flow from information that is available immediately following a single earthquake or swarm of earthquakes (e.g., levels of ground shaking, potential for coastal inundation by a tsunami, or warnings about an imminent volcanic eruption); intermediate- to long-term benefits that occur as society responds to the information provided by monitoring data; and knowledge benefits that will accrue as a result of an improved fundamental understanding of earthquake processes and the distribution of earthquake risk. Short-Term Benefits Benefits Associated with Earthquake Emergency Response. In those areas of the country with modern digital seismic networks and rapid communication of information to a central processing site where data are rapidly analyzed and disseminated, emergency managers have many useful tools at their disposal for responding to a damaging earthquake. The deployment of digital strong motion recording instruments in southern California, northern California, the Pacific Northwest, and the Salt Lake City area as part of the initial deployment of the ANSS, together with improvements in data processing and communications during the last decade, have facilitated the creation and Internet distribution of Geographic Information System (GIS) based maps that show the location of strong ground shaking (ShakeMaps) within minutes to tens of minutes after an event. In the critical short-term period immediately after an earthquake, these ShakeMaps are invaluable for creating an initial “snapshot” of the emergency by providing descriptions of the intensity of shaking, identifying which jurisdictions have been affected, and providing the basis for prioritizing response activities. Responders use information from instrumented buildings and infrastructure, when available, to support their determination of the degree of damage and functional capabilities. One immediate benefit is the quicker reuse of monitored buildings and infrastructure following an event, without the need to wait for inspections. ShakeMaps generated from seismic network data are also the primary input for loss estimates from HAZUS, which provide more detailed information including estimates of the number of casualties, the number of people displaced from their homes, and the approximate

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty number who will require shelter. Accurate information from the monitoring networks will also, through HAZUS, assist in the recovery effort by identifying areas of greatest economic impact and the direct and indirect economic losses. The restricted distribution of these significant benefits leaves the majority of earthquake-prone areas with either no information or less than optimal information upon which to mobilize a response. A fully funded ANSS will put important earthquake response tools in the hands of emergency responders in all seismically vulnerable regions of the nation. Benefits Associated with Tsunami Warnings. Tsunamis present a relatively infrequent, yet significant danger to coastal communities in California, Washington, Oregon, Alaska, Hawaii, and Puerto Rico. Seismic monitoring of large and great subduction zone earthquakes around the circum-Pacific and Caribbean region provides valuable public safety and warning information in advance of tsunami arrivals. Although great strides have been made over the last 50 years in tsunami detection and warning, 75 percent of all tsunami warnings issued since 1948 have been false alarms and did not require evacuation. Not only are these false alarm evacuations costly, they also erode the credibility of the emergency management tsunami warning system. The cost of failing to evacuate for a real event or incorrectly estimating the risk, however, can be much greater. Improvements in seismic monitoring can significantly increase the accuracy of the tsunami warnings and reduce the risk of false alarms and missed warnings. Benefits Associated with Volcanic Eruptions. Nearly every recorded volcanic eruption has been preceded by an increase in earthquake activity beneath or near the volcano. For this reason, seismic monitoring has become one of the most useful tools for eruption forecasting and monitoring. The overall economic risk to aircraft from airborne volcanic ash is estimated to be about $70 million per year (Kite-Powell, 2001). Coordinated observations, using both land- and space-based data, are needed to evaluate volcanic threats in realtime. Seismic monitoring—coupled with satellite observations and ash-cloud transport models—enables the air transportation industry to reroute flights and avoid costly ash-cloud encounters. Intermediate- to Long-Term Benefits Intermediate- and long-term benefits result from society’s reaction to seismic monitoring information in a strategic manner beyond the immediacy of an emergency response. The incremental benefits in this time frame principally reflect additional loss avoidance activities, beginning with property damage and running the course of all loss categories. Such

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty loss avoidance would result from either information gained from a single event or the accumulation of monitoring information over time. This accumulated knowledge will result in an improved approach to the design and construction of buildings and infrastructure, implementation of appropriate mitigation of existing structures, and the refinement of building polices and regulations. Benefits from Improved Seismic Zonation. The pattern of damage caused by earthquakes often has a highly irregular distribution, with concentrations of damage in some locations and relatively little damage in others. It is typical for the ground motion level to vary by a factor of two, or sometimes much more, between different locations that are equally close to the earthquake source. The capability to reliably predict the pattern of ground motion amplification in urban areas (seismic zonation), and thus identify locations that are especially vulnerable as well as ones that are not, has the potential to significantly reduce the aggregate cost of seismic mitigation by allowing it to be better focused on highly vulnerable areas. In the long term, this will lead to a reduction in earthquake losses and will guide rational urban development. However, the development of this capability is contingent on the deployment of dense arrays of strong motion recording instruments in urban regions, as is planned for ANSS. Benefits from Improved Earthquake Recurrence Models. Much of our knowledge of the location and characteristics of active faults that can generate potentially damaging ground shaking and other hazards, and the frequency of occurrence of potentially damaging earthquakes, is derived from a combination of geologic mapping and seismic monitoring. Knowledge about the source characteristics of large and small earthquakes, derived from recordings from seismic networks and other data, is used to identify and characterize the seismic potential of earthquake sources throughout the United States. Improved seismic monitoring will reduce uncertainty in earthquake recurrence and earthquake source characteristics throughout the United States, providing a more reliable basis for the ground motion maps used as the basis for building codes. Benefits from Improved Ground Motion Prediction Models. The ground motion prediction models used in current building codes are highly uncertain because of the sparse data set of strong ground motion recordings on which these models are based. This high level of uncertainty gives rise to large predicted ground motions at low annual probability levels (i.e., 1 in 2,475 chance of occurrence, corresponding to a 2 percent chance of occurrence in the next 50 years) that forms the basis of the FEMA National Earthquake Hazards Reduction Program (NEHRP) seismic provisions. In most regions of the United States, the ground motion design levels on which these building codes are based are larger than any ground

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty motions that have ever been recorded in those regions. Deployment of ANSS would, over time, provide data that would reduce the uncertainty in ground motion models and hence result in refined design levels for use in building codes. It could potentially also confirm indications from large overseas earthquakes that our current ground motion models, based on extrapolation of data from smaller-magnitude events at larger distances, may overpredict the ground motions close to large earthquakes. Benefits from Improved Loss Estimation Models. Improved seismic monitoring will improve the accuracy of the data underpinning loss estimation models and reduce the uncertainty associated with model outputs (see Chapter 5), leading to a number of beneficial economic impacts: Improved model credibility will increase public knowledge, confidence, and understanding of seismic risk. Pre-event planning will be improved and more focused as the range of potential outcomes is reduced. Building code and land-use requirements will improve. Reduced uncertainty will allow more effective correlation between seismic risk and building code and land-use regulations. In some instances this will lead to more rigorous standards and in others to less rigorous standards. Reduced uncertainty in the output of the loss estimation models will increase the amount of coverage that insurance and reinsurance companies are able to provide, and since reduced uncertainty will reduce risk, the cost of earthquake coverage should drop. Improved insurance take-up rates should shift more of the cost of disasters from grants and disaster relief payments (funded by the taxpaying public at large) to insurance recoveries (financed through premiums paid by property owners and tenants). Reduced uncertainty—and increased confidence in loss estimation models—will enable local, state, and federal decision-makers to better monitor the growth of seismic risk in the nation. 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. Benefits Provided by Performance-Based Engineering. The seismic hazard that exists across the nation is now quantified in scientifically defensible seismic hazard maps, and the inherent uncertainty in the methodology is used as a basis for the conservatism that these maps embody. Engineering technology has advanced to the extent that new buildings can be designed and existing structures rehabilitated to selected levels of safety. This technology—performance-based engineering—uses a combination of seismic hazard and structural vulnerability to produce facilities having predictable performance. Conservatism is built into the

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty design process to compensate for the expected uncertainty through the use of probabilistically based ground motion estimates, subjective limits on the use of various structural systems and commonly used materials of construction, and numerous additional safety factors. The prospective benefits from performance-based engineering are based on implementation of improvements in the design and rehabilitation processes compared with those currently used throughout the nation. A percentage of the buildings that are instrumented are expected to suffer negligible damage during severe earthquakes. This will constitute a proof test, and consequently the cost of rehabilitation will be avoided. Similarly, a percentage of buildings that are instrumented and damaged will require fewer repairs because their specific strengths and vulnerabilities will be better understood. The availability of site- and building-specific monitoring data will improve the ability to predict the performance of buildings under design-level earthquakes, leading to a reduction in the number of buildings that require strengthening and a reduction in the amount of strengthening necessary in those still found to be deficient. In addition, the improved seismic monitoring information is expected to yield improved hazard maps and refined design techniques that will yield more seismically efficient, and consequently less costly, designs. Special emphasis should be placed on instrumenting publicly owned buildings, especially federal buildings, to ensure continuity of maintenance of the instruments, open access to information about structural design and construction history, timely access to the monitoring records, and avoidance of liability issues that may concern private building owners. The discussion of the benefits of performance-based engineering (Chapter 6) makes the case that improved seismic design, expected to become available as a result of improved seismic monitoring, will generate prospective annual benefits of more than $140 million. Benefit calculations were based on an estimated valuation of the built environment now exposed to significant seismic risk of about $9 trillion and growing by about $500 billion per year. Since, with the exception of the West Coast states, most construction was not based on seismic design considerations, it is conservative to assume that 10 percent of the buildings need significant seismic strengthening, and strengthening costs will amount to between 10 and 150 percent of building value. For new construction, the added costs of seismic design are in the range of 1-10 percent of building value. Knowledge Benefits The third category of benefits is the accretion of knowledge. The accumulation of information from improved seismic monitoring potentially

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty leads to a more complete understanding of spatial and temporal physical processes associated with faulting and other sources of seismic activity. The accumulated record of weak and strong motion information could ultimately lead to some type of earthquake prediction capability. Potential for Benefits from Earthquake Prediction. At present there is no operational capability for short-term earthquake prediction, and it is unclear whether such a capability will ever be developed. However, several approaches to earthquake prediction are currently being tested, and deployment of the ANSS would provide valuable information for the development and testing of earthquake prediction methods. The ability to reliably predict future damaging earthquakes would completely transform our current approach to earthquake loss reduction and risk management. The current approach is based not on knowing the times and locations of future damaging earthquakes, but on assessments of their long-term frequency of occurrence. From a longer-term perspective, if we could predict or forecast damaging earthquakes that will occur in the United States over the next several years to decades, we would know where to focus mitigation activities and where such activities could be deferred. This would result in a large increase in the benefit-cost ratio of mitigation activities, because the benefits of mitigation in the face of otherwise certain losses would be greatly enhanced, and all of the resources available for mitigation could be devoted to locations where losses would otherwise certainly occur. If we could predict the damaging earthquakes that will occur over the intermediate term (the next several months to several years), there might not be time to complete much structural mitigation, but there could be a focus on preparedness activities that might potentially reduce both direct and indirect losses as well as deaths and injuries. Short-term prediction of damaging earthquakes (the next several hours to days) would permit a wide range of preparedness activities. These might include evacuation of hazardous locations, suspension of plans for non-emergency surgery at hospitals in favor of preparation to handle injuries, and securing lifelines and vital business and government data management operations. These actions could potentially reduce both direct and indirect losses as well as deaths and injuries. BENEFIT INTEGRATION Seismic monitoring plays a significant role in decision-making and benefit estimation by reducing the uncertainty associated with risk assessments; aiding the process of risk perception; and enabling individuals, groups, and organizations to make more informed choices. In addition, improved data on the likelihood and consequences of earthquakes derived from seismic monitoring facilitates the identification of avoided costs and

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty losses through the development of more meaningful risk management strategies ranging from emergency preparedness and mitigation to programs for aiding the recovery process following an earthquake. A variety of policy instruments (e.g., economic incentives, insurance, building codes) and regulations can be used to reduce future earthquake damage and loss of lives while providing financial relief after a disaster. The capability to reliably predict the pattern of ground motion amplification in urban areas, and thus identify locations that are especially vulnerable as well as ones that are not, has the potential to reduce earthquake losses significantly and guide rational urban development. The development of this capability is contingent upon the deployment of dense arrays of strong motion recording instruments in urban regions, as planned for the ANSS. There are very few recordings close to the large-magnitude earthquakes that control the design of structures in the western United States, and there are very few strong motion recordings of even small earthquakes in the eastern and central United States. Until there is adequate monitoring of strong ground motion in the United States, earthquake engineering practice will continue to be subject to very great uncertainty in the ground shaking levels that are appropriate for design, with the concomitant economic effects of potential underdesign (resulting in needlessly high damage levels) or overdesign (resulting in needless construction costs). There are clearly a large number of significant benefits that can be associated with improved seismic monitoring. Do they amount to at least a 2 percent reduction of estimated earthquake losses? A precise answer, involving a re-estimation and updating of FEMA’s HAZUS annualized loss study, may be unnecessary in light of the benefits discussions elaborated in Chapters 4-7. The dollar estimates for just some of the potential annual benefits from improved performance-based engineering add up to more than $140 million, an amount considerably higher than the range of estimated annual costs. This corroborates the idea that the relatively low annual costs of ANSS are such that the efficiency hurdle would be met. Clearly a full calculation of prospective benefits across all the benefit classes identified in this analysis, including lives saved, would reach a much higher prospective benefits total. The results of benefit-cost analyses, by themselves, are simply an input into the complex policy-making process. However, even with a set of conservative assumptions, implementation of the ANSS will yield prospective benefits that substantially exceed expected costs and therefore meet economic efficiency tests. Although an improved base level of research and information—much of which can be gained only after substantial improvements in the nation’s seismic monitoring capabilities—is required before a rigorous and fully quantified estimate of potential benefits can be made, the analysis under-

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty taken here indicates that on an annual basis the dollar costs for improved seismic monitoring are in the tens of millions and the potential dollar benefits are in the hundreds of millions. RECOMMENDATIONS The combination of the earthquake hazard together with the vulnerability of the built and human environment creates earthquake risk. The earthquake risk in the United States is growing at an alarming rate, even in the face of the remarkable advances in earthquake science and engineering (EERI, 2003). This phenomenon is the direct result of unprecedented growth and prosperity and the lack of focused, nationally applied, public policy that would cause the available design and rehabilitation techniques to be properly and universally applied. Earthquakes continue to cause an unacceptable level of damage, in terms of lives lost, property destroyed, and service interruption. Reduced levels of uncertainty and increased confidence in loss estimation models will enable local, state, and federal decision-makers to monitor the long-term growth of seismic risk in the United States. Information about the seismic performance of new and rehabilitated buildings and infrastructure, coupled with improved seismic hazard maps, will allow policy-makers to track incremental improvements in seismic safety through implementation of earthquake mitigation programs. 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 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.),

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty 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 FEMA 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 of 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

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty 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 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—offers 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 reduced human suffering. The integration of HAZUS loss estimation capabilities and U.S. Geological Survey (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 occur-

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty rence—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 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

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty monitoring, existing research and information are insufficient 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 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 significantly improve seismic monitoring should be viewed in light of the potential for reducing the cost of constructing new facilities, strengthening existing structures to achieve proper performance, and avoiding losses after 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

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Improved Seismic Monitoring Improved Decision-Making: Assessing the Value of Reduced Uncertainty 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.