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Working Paper A
Types and Examples of
Loss Estimation Studies
Potential users of loss estunates have different objectives, and
a loss estimate study can only be called successful when it meets
the purposes for which it is intended. Loss estunate studies can be
categorized according to: type of losses estimated, kinds of facilities
encompassed, certainty and detail, time span, and geographic scope.
These considerations can be combined in a variety of ways in a
particular study, and it would be impossible to discuss all of them.
The categorization scheme depicted in Figure A-1 is only one way of
structuring this subject matter. Other ways of categorizing and ana-
lyzing earthquake loss estimation methods may be found in reviews of
the field conducted from the 1930s to the present by Freeman (1932),
McClure (1973), Boissonade and Shah (1982), Steinbrugge (1982,
1986), Reitherman (1985), Scawthorn (1986), and Whitman (1986~.
Table A-1 divides earthquake loss estimation methods into five basic
types, which can be characterized in terms of the combination of
aspects presented in Figure A-1.
Type I: General
Type IT: Hazard Reduction
Type IlI: Emergency Planning
Type IV: Financial Risk
~ Type V: Economic Impact
The methods presented in Figure A-1 all have a low degree of
85
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TYPE OF LOSS
Monetary cost of damage
Casualties
Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifeli nes
Large potential for loss
All buildings or structures
CERTAINTY DETAI L
high low high low
TIME SPAN
Hypothesized (scenario) Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
,
~ ,
G EGG RAPH IC SCALE
Local Regional/state National
FIGURE A-1 Aspects of earthquake loss estimation studies.
certainty, which reflects the inherent uncertainty in the field of earth-
quake loss estimation and is not necessarily indicative of method-
ological errors or weaknesses in any particular method. In many
engineering applications, the term accurate connotes a method that
can reliably produce estimates that do not deviate much, say no more
than perhaps 10 percent, from the actual results. Earthquake loss
estimation methods that ace reliably of such accuracy (even in the
case of facility-specific studies with high levels of effort) do not exist.
Earthquake loss estimates that might prove to be in error by a factor
of 3* are often considered accurate in this field. The word certainty
is used here to describe the degree of confidence in a Toss estimate;
an estimate with low certainty will have a large range of uncertainty
*See footnote 2 in Chapter 4.
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87
TABLE A-1 Purposes, Users, and Examples of Types of Lose Estimation Studies
Type of Study Purpose Users Examples
I: General Identify the general scope General public J. H. Wiggins
of the earthquake problem as well as Company and
to establish a basis for all other Engineering
planning, prioritizing, users listed Geologists,
and funding earthquake below Inc.1979;
risk reduction efforts Algermissen
et al., 1972
II: Hazard Guide hazard reduction Legislative, Alfors et al.,
reduction actions to reduce regulatory 1973; Ward,
physical damage bodies; 1986; Office
government of State
officials Architect,
and staffs; 1982; Los
utilities and Angeles City
corporations Planning
Department,
1980
III: Emergency Facilitate more efficient Emergency Algerminsen
planning emergency response response et al., 1972;
agencies; D avis et al.,
utilities 1982a,b
and
corporations
IV: Financial Rate earthquake risks of Insurance, Freeman, 1932;
individual properties or mortgage California
collective risk of lending, and Department of
portfolios investment Insurance,
industries 1985; Working
Group Earth-
quake Hazard
Reduction,
1978
V: Economic Estimate economic losses National Applied
impact (including indirect, security Technology
long-term economic agencies and Council, 1985
impacts) national or
regional
planners
about the best estimate, and conversely one with high certainty will
have a small range of uncertainty.
Specific examples of loss studies follow.
TYPE I: GENERAL
An example of this broadest type of loss study is the research
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funded by the National Science Foundation (NSF) that produced
property loss estimates for earthquakes as well as floods, expansive
soil, landslides, hurricanes, and tornadoes Hi. H. Wiggins Company
and Engineering Geology Consultants, Inc., 1979) for cumulative
property losses during the years 1970 to 2000. Life loss was also
estimated to some degree as well as the reduction in losses that could
be expected by application of hazard reduction actions.
The scope of such a study is very broad both geographically and
in terms of considering more than one hazard. Although the results
are more aggregated and less certain than those from studies focus-
ing on an individual region and only one hazard, such comprehensive
estimates are needed. Comparisons among hazards, between the con-
tinuation of policies or the initiation of certain preventive actions and
between the losses that would likely occur In the near term versus
the Tong term, can be useful decision-making tools, especially at the
national policymaking level. This type of study also enables compar-
isons between the relative degree of risk faced by different states in
relation to fixed analytical benchmarks, in contrast to comparisons
of Tosses resulting from scenario events that vary in likelihood from
one study to another.
General studies are necessary if the intended application, such
as selecting among policy options and evaluating the effectiveness
of loss reduction programs, requires statements that say, for exam-
ple: "Unless significant new steps are taken, the costs of replacing
or repairing buildings destroyed and damaged by the nine natural
hazards studied, during a typical year, are likely to increase more
than 85 percent in the Midyear period between 1970 and 2000" Hi. H.
Wiggins Company and Engineering Geologists, Inc., 1979~.
Figure A-2 illustrates the characteristics combined in Type
national-scale Toss estunation study using the above-mentioned study
as the example. The types of losses estunated by such a study may
vary, but two basic components are direct monetary cost of damage
and casualties. The time variable is defined In terms of the cumulative
losses estimated to occur in a given time span, in this case 197(}2000.
The scope in terms of the kinds of facilities extends to all buildings,
and both certainty and detail are relatively low. This study could
also qualify as a Type T! (hazard reduction) study, which illustrates
the overlap between categories.
Regional Type ~ studies have fulfilled a variety of purposes,
perhaps their most frequent use being as an emergency planning
resource. The first of the studies (AIgermissen et al., 1972) sponsored
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TYPE OF LOSS
· Monetary cost of damage
· Casualties
Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifelines
Large potential for loss
· All buildings or structures
CERTAINTY DETAIL
·
high low high low
TIME SPAN
Hypothesized (scenario)
earthquake
· Cumulative set of Predicted Actual
earthquakes to earthquake earthquake
occur in time span
l
GEOGRAPHIC SCALE
Local Regional/state · National
FIGURE A-2 Aspects of a Type I, national-scale loss estimation study, using
the example of J. H. Wiggins and Engineering Geology Consultants, Inc. (1979~.
Key: · = aspects that pertain to this type of study.
by the National Oceanic and Atmospheric Administration (NOAA)
is a typical example of a Type ~ regional-scale study.
This study of the San Francisco area projects a broad range of
losses. Later NOAA and U.S. Geological Survey (USGS) studies are
quite similar in their broad scope. (~n the mid-1970s, earthquake
loss estimation projects and staff were shifted from NOAA to USGS
with no significant change in the type of studies undertaken nor the
methods used.) Casualties were estimated by time of day, by county,
and according to hazard sources, that is, casualties that would occur
within hospitals, schools, or dwellings are differentiated from other
injuries and fatalities. Outages of utility services, transportation
routes, and other types of functional losses suffered by lifelines were
estimated. Property lodes involved only single-family dwellings. An
updating loss study (Steinbrugge et al., 1981) also estimated property
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go
losses for commercial and most other building types. Figure A-3
shows the table of contents from the first NOAA study in order to
indicate its scope, which is sunilar to later NOAA-USGS studies.
Type ~ studies are often the first type of study to be conducted
in a region. They are essential tools of seismic safety advocacy. As
public policy, earthquake hazard reduction, or emergency planning
activities develop, other studies with narrower foci may be conducted
to support more specialized risk reduction efforts. Type ~ study
elements are often adapted for use in other kinds of studies, and
in some cases a Type ~ study can serve some of the more specific
purposes requiring Type Il. Ill, IV, or V studies (Figure Add.
The regional-scale study ~ much finer in detail than a national
study, but at the cost of a smaller geographic scope. This trade-off
between covering a larger area at a shallower level versus a smaller
area in-depth is an inescapable constraint on all earthquake loss
estimation studies. Figure A-4 categorizes a Type ~ regional study as
including all but the overall econorn~c Trip act and national security
types of losses; it may include the entire range of kinds of facilities. Its
Toss statements have usually been predicated upon scenario events,
and the certainty and especially its detail are greater than in the
case of national-scale studies. In most cases, it is unportant that
the study area boundaries or subarea boundaries match political
boundaries demarcating cities or counties.
TYPE II: HAZARD REDUCTION
Type IT studies primarily support hazard reduction efforts, and
the primary user is government agencies which adopt building codes
regulating new construction or retroactive ordinances pertaining to
existing hazardous facilities, land-use plans, and other laws and poli-
cies. Type ~ studies are often used for this purpose, but Type IT
studies emphasize this hazard reduction purpose with more specific
reference to the codes, ordinances, voluntary standards, or other
concrete policy options under consideration, and limit their scope to
the specific physical hazards, resources, or jurisdictions of interest.
On a state scale, cumulative losses over future time spans have
been estimated in studies of California (Alfors et al., 1973) and
Utah (Ward, 1986~. These two studies fit the pattern shown in
Figure A-5, with the scope of the California study extending to
all buildings and the Utah study focusing on particular types of
facilities, such as schools and hospitals. By using a multidecade time
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91
Table of Contents
PART A: ISOSEISMAL STUDIES.
PART B: CASUALTIES AND DA\lAG E
Section 1: Introduction
Section 2: Bases for Analysi s
Section 3: Effects on Local Medical Resources
Major Hospitals
Health Manpower.
Medical Supplies .
Bloodbanks
Hospital Reserve Disaster Inventory (HRDI) Modules .
Packaged Disaster Hospitals .
Clinical Laboratories . . . . . . . .
Ambulance Services .
Nursing Homes
Section 4: Demands on Medical Resources .
Deaths and Inj uric s, Ex eluding Dam s
Dams . .
· · ~
Section 5: Effects on Immediate and Vital Public Needs
Public Structures .
Communications
Transportation.
Public Utilities. .
Schools . . . . . . . . . c ~ .
Mercantile, Industrial ~ and Warehousing .
Homeless . ~ . .
Fire Following Earthquake
Selected Bibliography . . .
1
8
34
34
55
61
68
76
80
87
93
102
108
108
126
· · ~
133
133
146
153
172
i88
194
200
208
215
FIGURE A-3 Table of contents of the first of the joint National Oceanic
and Atmospheric Administration and U.S. Geological Survey studies. Source:
Algermissen et al. (1972~.
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92
TYPE OF LOSS
Monetary cost of damage
· Casualties
· Homeless
· Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
r '~
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifeli nes
Large potential for loss
· All buildings or structures
CERTAINTY DETAIL
· ~
high low high low
TIME SPAN
· Hypothesized (scenario) Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
. .
GEOGRAPHIC SCALE
Local · Regional/state National
FIGURE A-4 Aspects of a Type I, regional-scale loss estimation study, using
the example of Algermmsen et al. (1972~. Key: · = aspects that pertain to this
type of study.
span and estimating cumulative losses, these studies provide a way
for policymakers to develop long-term risk reduction strategies.
The study of 229 hospitals having 1,077 buildings in six southern
California counties (Office of State Architect, 1982) is a Type IT study
of a large urban region within one state, with the scope limited to
one kind of occupancy. Vuinerabilities were rated without regard
to scenario or cumulative losses. On a broader geographic scale,
limited also to one kind of facility, a survey of 800 major buildings on
University of California campuses was conducted (McClure, 1984~.
Losses in this case were estimated in terms of the relative risks
faced by building occupants, assuming the buildings were subjected
to the same strong level of shaking. These last two examples of
studies indicate that for some hazard reduction purposes, relative
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TYPE OF LOSS
· Monetary cost of damage
Casualties
Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifeli nes
Large potential for loss
· All buildings or structures
_
CERTAINTY DETAI L
· ~
high low high low
TIME SPAN
Hypothesized (scenario)
earthquake
· Cumulative set of Predicted Actual
earthquakes to earthquake earthquake
occur in time span
GEOGRAPHIC SCALE
Local · Regional/state National
E`IGURE A-5 Aspects of a Type II, state-scale loss estimation study, using
the examples of Alfors et al. (1973) and Ward (1986~. Key: · = aspects that
pertain to this type of study.
risk ratings rather than estimated numbers of casualties In a given
scenario earthquake may be the appropriate goal of the analysis.
An example of a local-scale hazard reduction study is the en-
vironmental impact report accompanying an ordinance that went
into effect in Los Angeles in 1981 requiring the hazards of about
8,000 unreinforced masonry buildings to be reduced (Los Angeles
City Planning Department, 19803. In this study, only one kind of
structure was studied, only life losses were of concern, the time span
was in terms of a future scenario earthquake, and the certainty and
detail were higher than with typical Type ~ studies (Figure A-6.
This Toss estimate study was calibrated with the earlier NOAA
study of losses estimated for a broader area and without an explicit
breakdown of casualties related to classes of construction (AIgermis-
sen et al., 1973~. The 1980 L08 Angeles study provided the conclusion
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TYPE OF LOSS
Monetary cost of damage
·Casualties
Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
Kl N DS OF FACI LITI ES
· Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifeli nes
Large potential for loss
All buildings or structures
CERTAINTY DETAIL
· ~
high low high low
TIME SPAN
· Hypothesized (scenario) Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
_ .
GEOGRAPHIC SCALE I
· Local Regional/state National
FIGURE A-6 Aspects of a Type II, local-scale lose estimation study, using the
example of Los Angeles City Planning Department (1980~. Key: ~ = aspects
that pertain to this type of study.
that in a great earthquake (the same scenario earthquake used in the
1973 NOAA study), the number of fatalities within the city would de-
cTine from 8,500 to 1,500 if the retroactive standards for unreinforced
brick buildings were implemented.
TYPE m EMERGENCY PLANNING
The NOAA-USGS study (Type I) also fits this category, but
another example is the work done by the California Division of Mines
and Geology to identify functional losses to lifelines in the urban areas
of Los Angeles (California Division of Mines and Geology, in progress;
Davis et al., 1982a) San Francisco (Davis et al., 1982b; Steinbrugge
et al., in progress), and San Diego (ReichIe et al., in progress). The
characteristics of this type of study, at the regional scale, are shown
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TYPE OF LOSS
Monetary cost of damage
Casualties
Homeless
· Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
· Lifelines
Large potential for loss
All buildings or structures
CERTAINTY DETAIL
high low high low
Tl M E SPAN
· Hypothesized (scenario) Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
rim ~
GEOGRAPHIC SCALE
Local · Regional/state National
FIGURE A-7 Aspects of a Type III, regional-scale loss estimation study, using
the examples of Davis et al. (1982 a,b). Key: ~ = aspects that pertain to this
type of study.
in Figure A-7. When such a study is devoted to a smaller geographic
area, the detail of the results increases, as shown by the finer scale of
the maps used to portray the results. The fire department of Orange
County, California has extended the detail of one type of emergency
planning study concerning transportation routes to the level of the
neighborhood surrounding each fire station, looking at each roadway
route that leads from the station to the outside area and considering
potential route blockages such as collapsing bridges or building debris
(C. Nicola, Orange County, California, Fire Department, personal
communication, 1986~. This might be called the "street map" scale
of Type ITI studies.
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TYPE IV: FINANCE RISK
This type of study is distinguished by its focus on direct prop-
erty loss and the fact that its prunary user for many decades has
been the insurance industry, and to a lesser extent the mortgage
lending and investment industries. Several examples are provided in
an earlier, widely published work in the field of earthquake loss es-
timation, Earthquake Damage and Earthquake Insurance (Freeman,
1932~. Freeman produced regional-scale property loss estimates for
all areas of the United States; the nature of this study is diagrammed
in Figure A-8. Another study that fits this pattern of a state- or
regional-scale financial study is the annually updated report issued
by the Department of Insurance in California, which estimates aggre-
gate losses in each of the various regional-scale zones of the state for
properties covered by earthquake insurance (California Department
of Insurance, 1985~.
In these two cases, the rating of the risk of experiencing prop-
erty damage or insurance losses extends essentially to Al buildings,
and the intended user is broadly defined as the property insurance
industry or government regulators having industry-wide insurance
concerns. Some Type IV studies conducted for a given company,
however, limit themmeIves to a smaller scope those facilities that
are contained in that particular company's portfolio of insured, fi-
nanced, or owned properties.
An appendix to a comprehensive report by the Office of Science
and Technology Policy (OSTP) discussed one particular aspect of
the subject matter that falls under the heading of Type IV studies:
the risk faced by various sectors of the financial industry during
certain possible earthquake prediction situations (Working Group on
Earthquake Hazards Reduction, 1978~. This analysis pointed out
the need to divide a financial sector, such as mortgage lending, into
smaller categories when analyzing earthquake risk, because of the
different characteristics in terms of assets, liabilities, income, and
expenses of institutions such as commercial banks, savings and loans
establishments, and life insurance companies. This type of study is
an exception to the rule that financial risk studies generally focus on
the monetary cost of damage as the type of loss of concern.
TYPE V: ECONOMIC IMPACT
Type V studies deal with the decrease in the economy's pro-
duction of goods and services that might result months after the
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TYPE OF LOSS
Monetary cost of damage
Casualties
Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
Economic impact
National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifelines
Large potential for loss
· All buildings or structures
_ ,
CERTAINTY DETAI L
high low high low
T
TIME SPAN
· Hypothesized (scenario) ~ Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
GEOGRAPHIC SCALE
Local · Regional/state National
FIGURE A-8 Aspects of a Type IV, regional-scale loss estimation study, using
the example of Freeman tl932~. Key: ~ = aspects that pertain to this type of
study.
earthquake, rather than just the unmediate damage. The most re-
cent effort of this type has been initiated by the Federal Emergency
Management Agency (FEMA). The ATC-13 study is the engineering
component of the overall FEMA method that will use the ATC-13
estimates of initial damage and decrease in functionality to forecast
the effects on local, regional, and national economies and national
security. Therefore, the ATC-13 method may also be thought of as
a Type I, general-purpose loss estunation technique. The primary
motivation for the ATC-13 study was concern over the ability of de-
fense industries to supply militarily essential products after a major
C)aTifornia earthquake, and it was requested by the National Security
Council (NSC). Figure A-9 illustrates the basic characteristics of this
proposed type of study (which has to date been implemented only
In pilot projects). The ATC-13 or earthquake engineering portion of
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TYPE OF LOSS
· Monetary cost of damage
·Casualties
· Homeless
Functionality of essential facilities
Safety problems of potentially
high hazard facilities
· Economic impact
· National security
KINDS OF FACILITIES
Selected facilities (e.g., occupancy,
ownership, construction)
Essential facilities
Lifeli nes
Large potential for loss
· All buildings or structures
CERTAINTY DETAI L
high low high low
TIME SPAN
· Hypothesized (scenario) Cumulative set of Predicted Actual
earthquake earthquakes to earthquake earthquake
occur in time span
GEOGRAPHIC SCALE l
· Local · Regional/state ·National
FIGURE A-9 Aspects of a Type V, regional-scale loss estimation study, using
the example of FEMA Fedloss Method and its ATC-13 engineering component
(Applied Technology Council, 1985~. Key: · = aspects that pertain to this
type of study.
this overall economic loss modeling method could also be applied to
other purposes and diagrammed differently, but is outlined here in
the context of its original purpose. ATC-13 as of this date has not
been used to produce a complete, published loss study.
Much detail exists with the FEMA/ATC-13 type of study be-
cause its aim was to clevelop an inventory of almost every facility
according to about 500 econorn~c sectors for most of the state of
California. It makes precise statements about the amount of damage
and the functional loss that could be suffered in each facility. It
includes industrial tanks, tunnels, and other nonbuilding structures
in greater detail than other methods. The AT~13 method devel-
ops losses on the scale of each individual factory, for exan~ple, first
estimating damage and then determining the number of days after
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99
the earthquake before 30 percent, 60 percent, and 100 percent of
pre-earthquake functioning is restored.
Because hard data or relatively accurate field-acquired informa-
tion describing the construction characteristics of all buildings in
a region do not exist, and because of few data on the connection
between building damage and loss of function, the ATC-13 method
provides inferences for constructing an inventory from readily avail-
able socioeconomic data bases. Expert opinion was used to develop
damage and loss relationships for a large number of types of facilities.
The ATC-13 example is a reminder that when great detail is
sought on a large scale requiring that the loss estimation method
answer a number of difficult questions in a detailed, quantitative
way—certainty must be sacrificed. Widely accepted, easily applied,
and objective ways of rating the certainty of loss estimate methods
do not exist, and the issue of what constitutes acceptable certainty
or acceptable detail can be decided only by reference to the fitness
of the study for its intended purpose. This again brings up the
important subject of the users and uses of loss estimation studies, a
theme throughout this report.
Representative terms from entire chapter:
loss estimation
