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Executive Summary An earthquake loss estimate is a forecast of the effects of a hy- pothetical earthquake. Depending on its purpose, a Toss study may include estimates of deaths and injuries; property Tosses; Toss of func- tion in industries, lifelines, and emergency facilities; homelessness; and economic impacts. This report focuses primarily on Toss esti- mates of the type funded by the Federal Emergency Management Agency (FEMA). They apply to an urban area or region and are in- tendec! primarily for use by local and state governments for disaster response and mitigation planning and the formulation of near- and long-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, Toss estimation is still too much of an art for strict standards to be desirable. Instead, the pane! 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 CaTifornia-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 losses 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 loss estimates. However, there are two basic areas in which users' desires conflict with the state of the art in loss 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 loss 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 losses during actual earthquakes, as wed as the intrinsically difficult in- ventory problem. Despite these limitations, loss studiesproperly conducted and used with an understanding of the methods' strengths and limitations can be of great value in planning, initiating, and ups dating programs for earthquake hazard reduction and in emergency planning. More ambitious than the basic type of Toss 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 panel 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 consiclered the possibility of developing tech- niques and an operational capability to estimate postearthquake losses within hours after an actual earthquake event, without field reconnaissance, as a basis for better action in disaster response and financial assistance. The pane! 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 are published in two forms: the pane} report alone and the panel report with a group of seven work- ing papers. The working papers treat many subjects in detail and are intended for a more technical audience. Chapter 1 of the pane! re- port introduces the issues and discusses the basic underlying method common to most loss estimation studies. The following seven chap ters 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 losses, and rapid postearthquake loss estimates, respectively. Finally, Chapter 9 presents the panel's recommendations on 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 urbanizer] area in the United States. ~ Take opportunities to evaluate components of large-scale loss estimation methods (e.g., inventory methods) by comparisons with more accurate small-scare, 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 de- velop a satisfactory quantitative scale for the damaging potential of ground motions. ~ Corporate 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 all of these efforts, special attention should be given to lifelines, emergency response facilities, and storage of hazardous materials.