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Executive Summary An earthquake loss estunate is a forecast of the effects of a hy- pothetical earthquake. Depending on its purpose, a loss study may include estimates of deaths and injuries; property losses; loss of func- tion in industries, lifelines, and emergency facilities; homelessness; and economic impacts. This report focuses primarily on loss esti- mates of the type funded by the Federal Emergency Management Agency (FEMA). They apply to an urban area or region and are in- tended primarily for use by local and state governments for disaster response and mitigation planning and the formulation of near- and Tong-term strategies for earthquake hazard reduction. However, the same basic methods, and many of the techniques for carrying out portions of these basic methods, also apply to other types of loss estimates. Most loss estimates are made for one earthquake or a few earth- quakes, specified by magnitude and location. The result is one or more scenarios describing the consequences of the selected earth- quakets). While this is the most common result of a loss study, especially when the objective is disaster response planning, it is not necessarily the most meaningful type of result. When the objective is to select the best allocation of resources for hazard reduction, more information can be derived from a probabilistic risk analysis that considers losses from a spectrum of possible earthquakes, taking 1

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2 into account the relative likelihood of the various magnitudes and locations of the earthquakes. Even for the type of loss estimate of greatest interest to FEMA, the Pane] on Earthquake Loss Estimation Methodology was unable to develop strict standards for conducting loss studies, although such standards might be desirable for the sake of efficiency and consis- tency. While incorporating some elements of science, loss estimation is still too much of an art for strict standards to be desirable. Instead, the panel has drawn up a general set of guidelines for such studies. These guidelines first address the planning of a study and the active participation of state and local officials or other intended users. The objectives and scope for a study must be defined carefully, and thought must be given to formation of an inventory of facilities (i.e., buildings and other structures) and networks, so that this inventory can have lasting value, for a variety of purposes, after completion of the study. State and local officials must ultimately disseminate, explain, and make use of a study, and hence must understand the process of preparing the Toss estimate. Their early and continuous involvement is essential. The guidelines also discuss the selection of scenario earthquakes (seismic hazard analysis), the preparation of the inventory, the selec- tion of relationships connecting ground shaking and ground failures to damage and loss, and the evaluation of lifelines, facilities essential for emergency response, and facilities with a potential for causing a very large loss. Scenario earthquakes should be relatively probable, yet dam- aging. Use of very large but very infrequent earthquakes for this purpose may cause rejection of loss estimates or a fatalistic attitude. Use of frequent but small events provides little useful information. Preparation of the inventory should emphasize local sources of data, as much onsite viewing and inspection as the budget allows, and seismically suspicious and critical facilities. As for motion-damage-Ioss relationships, valuable information of an empirical nature has been assembled for certain types of buildings in California through the combined efforts of the Insurance Services Office and the large-scale loss estimation projects of the National Oceanic and Atmospheric Administration and the U.S. Geological Survey. An ambitious collection of formalized expert opinion for a broader spectrum of buildings and structures in California has been gathered by the Applied Technology Council, through funding from FEMA. For loss studies in other areas, expert opinion (i.e.,

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3 a combination of experienced experts, local engineers, architects, building department officials, and lifeline systems operators) or other methods could be used to modify the California-based information for application to the types of facilities found in the areas being studied. A final recommendation in the guidelines concerns the form of loss estimation reports. It is essential that main findings and conclusions be presented in a way that is useful and understandable to the public and to those who must act on the basis of the report. It is also important to document thoroughly the manner in which the inventory and Tosses were established. Careful attention must be given to the form and writing of the report to achieve these two objectives. The guidelines respond to many of the recommendations and de- sires expressed during an exploratory survey, conducted by the panel, of past and potential users of Toss estimates. However, there are two basic areas in which users' desires conflict with the state of the art in Toss estimation: (1) the expression of Tosses as specific numbers, and (2) the identification of individual buildings and other structures likely to be seriously damaged. Loss estimates are approximate, and it is only prudent to report this uncertainty using, for example, a best estimate plus the likely range of losses. Furthermore, a con- fident prediction of damage to specific facilities requires thorough study, usually beyond the scope of a large-scale Toss study, and such predictions may cause legal problems and political controversy. Even using the best of today's methods and the most experi- enced expert opinion, Tosses caused by scenario earthquakes can only be estimated approximately. Overall property loss estimates are of- ten uncertain by a factor of 2 to 3, and estimates of casualties and homeless can be uncertain by a factor of 10. Moreover, the accuracy of estimates will improve only slowly in the future, since a major source for these uncertainties is the very spareness of data on Tosses during actual earthquakes, as well as the intrinsically difficult in- ventory problem. Despite these limitations, Toss studies properly conducted and used with an understanding of the methods' strengths and limitations can be of great value in planning, initiating, and up- dating programs for earthquake hazard reduction and in emergency planning. More ambitious than the basic type of loss study is the attempt to evaluate the broader economic impacts of an earthquake, considering such matters as lost revenue and unemployment, on both the directly

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4 affected region and a larger area that is linked economically to it. This type of study might also be undertaken to assess the impact of earthquakes on national defense. The pane} recognizes the potential value of this type of analysis and recommends the addition of a pilot project to a future loss estimate study. The pane] has also considered the possibility of developing tech- niques and an operational capability to estimate postearthquake Tosses within hours after an actual earthquake event, without field reconnaissance, as a basis for better action in disaster response and financial assistance. The panel has little enthusiasm for the prospects of establishing a reliable capability of this kind, because of the large uncertainties in loss predictions and because rapid compilation of actual losses is feasible. The results of the panel's work take two forms: the panel report itself and a group of seven working papers. Chapter 1 of Part I, entitled Panel Report, introduces the issues and discusses the basic underlying method common to most loss estimation studies. The following seven chapters address user needs, ground-shaking hazard, building damage and losses, collateral hazards other than ground shaking, damage and losses to special facilities and urban systems, indirect Tosses, and rapid postearthquake loss estimates. (In Part IT, entitled Working Papers, many subjects are treated in more detail.) Finally, Chapter 9 presents the panel's recommendations regarding research and development to improve loss estimation capabilities. These are summarized below. . Compare losses predicted by one or more methods with ob- served losses, following the next damaging earthquake to strike an urbanized area in the United States. Take opportunities to evaluate components of large-scare loss estimation methods (e.g., inventory methods) by comparisons with more accurate smalI-scaTe, detailed studies or with available hard data, such as the seismically hazardous building inventories that are now frequently compiled in great detail by local governments in California. . Perform sensitivity analyses to evaluate the significance, for overall losses, of possible errors at each stage of an analysis. With a concerted effort, develop a classification system for buildings and other facilities for use throughout the United States. . Compare existing inventory methods with the aim of synthe- sizing their strong points.

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s ~ Compare the motion-damage-Ioss components of various methods with the aim of synthesizing their strong points, and d~ velop a satisfactory quantitative scale for the damaging potential of ground motions. ~ Incorporate new developments In the geotechnical field as they become available that will allow more accurate prediction of both the location and severity of ground failures. ~ Document precisely how loss studies have been used in hazard reduction and emergency planning efforts. ~ hnprove the process of collecting loss data of statistical sig- nificance immediately after significant earthquakes. In connection with Al of these efforts, special attention should be given to lifelines, emergency response facilities, and storage of hazardous materials.