The Economic Consequences of a Catastrophic Earthquake Proceedings of a Forum (1992) / Chapter Skim
Currently Skimming:
2 WHAT ARE LIKELY CATEGORIES OF LOSS AND DAMAGE?
2 WHAT ARE LIKELY CATEGORIES OF LOSS AND DAMAGE?
Pages 35-99
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 35... ...
Dr. Friedman has 35 years of experience in the assessment of casualty and damage potentials of natural disasters for the insurance industry, federal agencies, and most recently for the All-Industry Research Advisory Council.
|
From page 36... ...
The estimates of seismic risk typically use the modified Mercalli scale, for better or for worse. It is at least generally understood and accepted, and has been commonly used as a way of defining the seismic risk.
|
From page 37... ...
For any study, the inventory is critical, because this is the whole basis upon which you are going to assign your loss estimation. Unlike other aspects of loss estimation, an actual inventory exists.
|
From page 38... ...
Reinforced concrete, precast reinforced concrete, lift slab Reinforced concrete, floors and roofs not concrete Mixed construction, small buildings and dwellings Mixed construction, superior damage control features Mixed construction, ordinary damage control features Mixed construction, intermediate damage control features Mixed construction, unreinforced masonry Buildings snecificaliv designed to be earthquake resistant number of buildings of certain kinds. The problem is that it almost never exists in any published form, and the costs of achieving that are astronomical; when one talks about deeming an inventory, he is really defining some kind of simulation or subterfuge for the actual inventory that exists.
|
From page 39... ...
Arnold, ~/~7 FIGURE 2-1 Earthquake-damage-loss estimation. [6'e taffy
|
From page 40... ...
cn 15 CO o 10 s //5 D ~ 3C 4A SB/ V Vl V11 MM INTENSITY V11 IX FIGURE 2-2 Loss ratio versus modified Mercalli intensity (mean damage ratio cu~rves)
|
From page 41... ...
Figure 2 - shows the ATC-13 matrix for facility class 18, which is a low-rise, concrete, movement-res~stant, frame-building type. It can be seen that the matrix shows fairly small amounts of damage at even the high modified Mercalli figures, and 100 percent damage would be elected in this class of building for any modified Mercalli figure.
|
From page 42... ...
6 8 10 12 MMI +~1 1~l rl ~rl~r~l l~ ~~ ~ l' ~ ~ _ ,. ~., ~_ ,,% _ O_ _ _ Pligh Estimate '1""1""i'~ ~ - 3lF ~ ~ 8 ~ ~ ~ _ -+ X ~ ~ _ _~ + _ + - ~ O =,Q,Q,1 ,,,,1,, I 1~ 6 8 10 12 MMI MMI ~>,,,,1 ,,,, 1, ,, ,1~ 6 8 10 12 _ c {D _ a, E c: FIGURE 2" E~pert responses to round two daTn age factor questionnaire for Facility Class 18 -- low-rise moment-resisting ductile concrete-frame buildings.
|
From page 43... ...
As earthquake occurrences, such as Whittier and Loma Prieta, continue more information is developed but methodologies are not being reviewed and validated like they should be. A frequent subject of interest In loss estimation is deaths and injures.
|
From page 44... ...
buildings Mean FIGURE 2~6 Intensity-damage relationships for unreinforced masonry builclings.
|
From page 45... ...
A new development in loss estimation has been its entry into the commercial area. An example of a commercial project, to some extent sponsored by the insurance industry, and really directed at providing information of specific value to the insurance industry, is a project based on research done originally at Stanford University.
|
From page 46... ...
The loss does not stop at the damage. The Hyatt Regency Hotel in Burlingame, near San Francisco Airport, is a new, 400-bed hotel that was completed about a year before the Loma Prieta earthquake, and is a 400-bed hotel.
|
From page 47... ...
The hotel suffered some damage in the Loma Prieta earthquake. It suffered some nonstructural damage, but this was symptomatic of some structural damage within the building.
|
From page 48... ...
If the general economy of the region or the country breaks down, obviously this situation does not apply. Also, there are other cares in Loma Prieta where clearly the situation did not apply and where there were significant losses.
|
From page 49... ...
This illustration attempts to answer the question of whether a useful estimate currently can be made of the casualty- and damageproducing potentials of low- and medium-rise buildings (insured and uninsured) due to a catastrophic earthquake in the central or eastern United States.
|
From page 50... ...
Loss-estimation procedures for earthquake-caused disasters depend upon the interaction of the geographical pattern of ground motion with the spatial array of the population or properties at risk (elements-at-risk) and their loss vulnerabilities.
|
From page 51... ...
To attempt to answer damage-potential questions on the overall inventory of buildings in spite of the lack of specific element-at-risk information, these losses have been numerically approximated through What-if analysis procedures.5 6 Early computer simulations modeled the geographical pattern of ground motion on bedrock and then superimposed the effects of local ground conditions, which were approximated on a 0.1 degree latitude and longitude and system, using broad definitions taken from a geology map of California. This approach was encouraging because of the similarities of the simulated ground-motion patterns and the actual isoseismal patterns of past California earthquakes.
|
From page 52... ...
Another important development in earthquake-loss estimations is the awareness that a moderate-magnitude earthquake can produce the same seventy of ground motion as a great earthquake. The difference is that in a moderate-magnitude event, the area affected by this strong motion is much smaller, and the average duration of significant shaking is shorter.
|
From page 53... ...
Certainly, the physical magnitude of the event is an important factor, but perhaps of equal importance is how its severity pattern (ground motion of an earthquake or high wind of a hurricane) happens to overlay the usually haphazard spatial array and density of the exposed elements-at-risk that are susceptible to loss.8 A plot of the landfall location of the 247 hurricanes that have crossed the United States coastline sir ce 1870, classified by their physical intensity at landfall as expressed in terms of the five-unit Saffir-Simpson scale, represents a hurricane climatology.
|
From page 54... ...
The geographical distribution of the catastrophe index, assuming a 1990 recurrence of each of the 247 landfalling hurricanes, is very different from the distribution of these storms grouped by their Saffir-Simpson intensity. The catastrophe index analysis also can be used to demonstrate how venous combinations of an earthquake's magnitude and epicenter location, relative to the geographical distribution of elements-at-risk, can be utilized to better understand the pertinent characteristics of a catastrophic earthquake in the central or eastern United States.
|
From page 56... ...
A catastrophe index, which has been determined for each of the scenario earthquakes, is used to define the characteristics of a catastrophic earthquake in the central or eastern United States. Choice of the scenario earthquakes was made by considering the ten strongest events with epicenters in the central and eastern United States during historic times (Table 2-6~.
|
From page 58... ...
. ~ Figure 2-7 Composite map of the highest MMI that might be observed at each location if the magnitude of a simulated earthquake held constant at 8.6 and its epicenter were shifted in increments along the New Madrid seismic zone.
|
From page 59... ...
Similar combinations of earthquake magnitudes and locations were needed to represent earthquake-prone sections of the eastern United States-Charleston, South Carolina, and Boston, Massachusetts. Using the same procedure, the 1886 Charleston earthquake and the 1755 Cape Ann earthquake listed in Table 2-6 were modeled to estimate the loss-producing damage potentials if such events were to recur in 1990.
|
From page 60... ...
. Richter magnitude 8.
|
From page 61... ...
..:,..,:,.. :' ~r (' :.~ ~ ~;w Richter magnitude 7 .6 Body wave magnitude 6.7 I' I.,, I; .
|
From page 62... ...
~ ~1_ In' >:: L :~ -..;:''" .~ , ; ; ~~ \\ r.. Richter magnitude 6.
|
From page 63... ...
:, '.: >,,;~ . ~q~ ~QC~ W~ -I Richter magnitude 6.7 Body ware magnitude 6.25 W:.~2N at; ' FIGURE 2-11 Loss-producing potential of a recurrence of a stronger (magnitude 6.7)
|
From page 64... ...
Estimation of Earthquake-Caused Fatalities Because most earthquake-caused deaths and injuries result from damaged buildings, the casualty-estimation procedure should be based In some manner upon building damage, especially with respect to the percentage of structures that might have serious structural and nonstructural problems. Ideally, an estimation procedure for determining the casualty and damage potentials of these scenario earthquakes should have detailed information on the number and spatial distribution of each type of building in affected areas, along with their characteristics relating to damage and casualty-producing potentialities.
|
From page 65... ...
o In U1 o Cal o ]
|
From page 66... ...
, ~ ~ ~ ^ ^~ ^ _ _ ~ 1~ ~ _ ~ ~ _ ~ _ exposure is much larger than the 4Uu,uw persons that are estimated to De affected by a New Madrid earthquake of Richter magnitude 6.0. If the Cape Ann earthquake had a magnitude of Richter 6.7, over 7 million people would be subjected to ground motion of MMI VII-or-more compared with about 3 million In a Charleston (Richter 6.7)
|
From page 67... ...
Even though the available information cannot provide fatality estimates with a high degree of accuracy, the implied interactions between the earthquake's magnitude, its location relative to the spatial array of the elements-at-risk, and the fatality vulnerability relationships emphasize the importance of considering these particular factors when attempting to define the fatality-producing characteristics of a catastrophic earthquake in the central and eastern United States. Estimation of Earthquak~caused Building Damage Estimation of building damage resulting from each of the eight scenario earthquakes also was based solely on the use of immediately available data.
|
From page 69... ...
would affect about $213 billion of residential buildings caused by a hypothetical Richter 6.7 Cape Ann earthquake as compared with an exposure of $69 billion for a Richter 6.7 Charleston earthquake or $54 billion with a Richter 6.7 event located at the New Madrid epicenter zone. About $6 trillion of the $13 trillion total insured commercial building values in the United States would be affected by ground motions of MMI V-or-more during a repeat of the 1811 (Richter 8.6)
|
From page 70... ...
Estimation of Building Damages by Fire Following an Earthquake Significant building dam ayes also can be caused by fire that follows some high-magnitude earthquakes. No quantitative estimates or estimating procedures were found in the literature regarding the damage potential of this peril in the central or eastern United States.
|
From page 71... ...
vulnerability relationship for ground motion and fire damage to residential and commercial buildings resulting from a repeat of the Richter 8.6 New Madrid earthquake. Because of the likely low degree of accuracy of these estimates, the relative ranking of the states by damage expectancy is probably more realistic than the absolute values of the loss estimates.
|
From page 72... ...
72 ECONOMIC CONSEQUENCES OF AN EAR THQUA~ TABLE 2-9 Estimated Building-Damage Losses by State Resulting from a 1990 Recurrence of the December 16, 1811, New Madrid Earthquake with a Richter Magnitude 8.6, Based on Damage Vulnerability Scenario 2 Damage (millions of dollars! Fire StateDamage Ground-Motion DamageTotal Residential CommercialDamage Alabama2911,1529562,399 Arkansas2,6468,97823,72635,350 Georgia29114112255 Illinois8533,4273,8758,155 Indiana6882,6962,3185,702 Iowa1449 Kansas15410 Kentucky1,2224,7956,08212,099 Louisiana2068046811,691 Maryland0112 Michigan1337 MinnesotaOOOO Mississippi6502,6832,5515,884 Missoun1,5815,8549,80617,241 Nebraska0000 New York0112 North Carolina176767151 Ohio4621,7441,5933,799 Oklahoma38154125317 Penn.cylvan~a0224 South Carolina9353478 Tennessee3,61913,18528,05544,859 Texas35138116289 Virginia4171637 West V~rg~a8302866 Wisconsin0112 Total12,36145,89080,157138,408
|
From page 73... ...
Results of the analysis suggest that a moderately severe or high-magnitude earthquake centered at any of these three epicenter locations could cause thousands of fatalities and billions of dollars in building damage. The purpose of this estimation exercise was to determine the implied casualty- and damage-producing potentials of earthquakes in selected sections of the central and eastern United States as implied from immediately available information.
|
From page 74... ...
Damage, egresses in terms of the catastrophe index (Table 2-5) , is based on vulnerability scenarios 1 and 3.
|
From page 75... ...
A final consideration in defining the characteristics of a catastrophic earthquake is probability of occurrence. Nishenko and BaJlinger,6 have recently made estimates of the probability of occurrence of major earthquakes in three regions (Table 2-10~.
|
From page 76... ...
Wave Ms mb Epicenter Location New Cape Madrid Charleston Ann 4.00 4.90 000 4.50 5.15 558 5.00 5.40 65100230 5.50 5.65 5009503,100 6.00 5.90 2,300430014,000 6.50 6.15 6,50012,50038,000 7.00 6.40 15,00030,000 -- 7.50 6.65 34,00061,000 -- 8.00 6.90 65,000 -- -- -- 8.50 7.15 120,000 -- -- -- The focus in this presentation has been on fatalities and damages to buildings caused by a high-magnitude earthquake. There are many other sources of loss potential that also have to be considered, such as damage to utilities, roads, and bridges; medical cost for the injured; the cost of debris removal; damages to automobiles and other personal property, business-interruption costs; and liability-loss potentials.
|
From page 77... ...
Using these ideas and other insights from the literature as a basis, the following are some general observations about the utility of the work that has been done to date for projecting structural and nonstructural losses, indirect earthquake impacts, and long-term socioeconomic effects, as well as some observations about their relationship to policy. The messages that will probably come across are that existing findings from loss-estimation methodologies have certain inherent limitations as policy tools and that there are currently significant gaps in our understanding of the range of probable earthquake impacts, particularly impacts not related to building damage.
|
From page 78... ...
Ironically, we know considerably less today about the estimation of earthquake-related deaths and injuries than we do about potential building damage. Fortunately, a number of very capable scientists have recently begun efforts to close this gap.
|
From page 79... ...
However, even if disbelief is suspended and a great deal of faith is placed in the methods that have been developed for estimating losses, the problem remains that, for some losses and impacts, there are often simply not enough data from which to extrapolate. Estimating long-term, regional, or systemwide economic impacts is also complicated by the fact that social systems are so complex Steinbrugge, in discussing the problem of compiling loss statistics, notes that dollar loss estimates can vary widely, depending on whether losses are considered as Personal or n~personal.n20In other words, the notion of who is likely to bear the costs of damage is interwoven with the cost figures themselves.
|
From page 80... ...
However, the results of quantitative loss estimates will invariably be judged in light of qualitative and value judgments. To use an extreme example, a statistic indicating that 50 persons were killed (or will be killed)
|
From page 81... ...
Thus, policy initiatives based on studies of the most obvious, direct effects of earthquakes may not be reducing losses as much as anticipated. At present, perhaps the best that can be done is to be explicit about the limitations of the methods used and about what loss estimates do not reveal about overall costs -- while at the same time try to put as much emphasis as possible on understanding potential higher-order impacts.
|
From page 82... ...
Second, cultural environment includes intangible assets such as human relationship networks and an indiv~dual's sense of place, which, together, can be called social capital. The goal of this presentation is to give some indication of how the value of these kinds of assets can be incorporated into economic analyses of the value at risk from natural hazards like earthquakes.
|
From page 83... ...
In other cases of cultural assets, excludability even from viewing may be impractical. Nonexcludability affects economic valuation, because it normally prevents public goods from being provided via markets.
|
From page 84... ...
or benefit value, or both. What about for cultural assets?
|
From page 85... ...
But since actual prices often are not observed for cultural assets, or since prices often do not reflect the full social value of the asset, substitute methods of valuation are often needed. Some helpful valuation methods adapted from the field of environmental economics include: · opportunity-cost method; · contingent-valuation method; and · travel-cost method.
|
From page 86... ...
Therefore, for the purpose of social valuation of cultural assets, povate-market appraisals can at best serve as lower bounds for the actual values. Opportunity-Cost Methocl A second way to assess willingness to pay for an asset is to tally the opportunity costs of the resources currently dedicated to keeping it.
|
From page 87... ...
In this case, the absence of an observable market value for the asset is handled by creating a hypothetical market in which respondents are asked to make hypothetical economic decisions. The accuracy with which these hypothetical decisions represent real economic valuations depends upon the care with which the survey instrmnent is constructed.
|
From page 88... ...
The real polic~r-relevant value is the benefits the lighthouse yields over and above the opportunity costs of its services. For instance, Zone A visitors pay an average of $6.30 per visit, though many would be willing to pay more, say $10 or $15.
|
From page 90... ...
it: 3 In _ A> Moo 3 o ~ .= _ Cal ~ 3 o ~7 .~ _ Ct E ~ cn _ 'U.
|
From page 91... ...
But they could not take over the human ties. The destruction of social capital could be a natural consequence of the forced migration that could follow a major disaster; one might think of such capital as a special type of irreplaceable cultural asset, but one that is more personal and intangible than those discussed earlier.
|
From page 92... ...
One might use a contingent-valuation approach, surveying people to find out what their social capital is worth. Alternatively, one might look for ways social capital affects economic decisions.
|
From page 93... ...
LOSS AND DAAL4GE Wage W2 W1 93 \ \ \L demand Labor supply L1 L2 Number of working households FIGURE 2-13 Effect of a local labor demand Increase.
|
From page 94... ...
94 Wake W2 W3 ECONOMIC CONSEQUENCES OF AN EAR THQUA~ \ /'\ / \ \ Labor \~ demand Labor supply L3 L2 Number of working households FIGURE 2-14 Effect of a local labor demand decrease.
|
From page 95... ...
If labor demand falls ad the way to the lowest level (L3) , and if the social capital value is added up for all the workers who leave, the value of social capital lost would be the area of the shaded triangle in Figure 2-16, which could be measured if the labor supply and demand curves were known.
|
From page 96... ...
96 W2 W3 ECONOMIC CONSEQUENCES OF AN EAR THQUA~ Wa' He \\~ Labor Labor \ \ \ \ Labor \ \ \ \ demand L3 L2 Number of working households FIGURE 2-15 Social capital lost from relocation.
|
From page 97... ...
LOSS AND DAMAGE Wape W2 W3 97 Labor supply Labor demand L3 L2 Number of working households FIGURE 2-16 Losses to workers from lower labor demand.
|
From page 98... ...
I was asking whether your procedure would have Even a similar loss estimate to what the actual losses were from the Loma Prieta earthquake? In other words, how good is your model?
|
From page 99... ...
However, there are also gains. The insurance company tends to operate as a closed system and look only at its own balance sheet.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.