TOPIC 4: DEVELOPING COST-EFFECTIVE EARTHQUAKE HAZARD MITIGATION POLICY

1. TOPIC 4: DEVELOPING COST-EFFECTIVE EARTHQUAKE HAZARD MITIGATION POLICY Mitigating hazard (reducing risk) from earthquakes or other natural disasters involves economic and policy issues as well as the scientific one of estimating the hazard and the engineering one of designing safe structures. $100M seismic retrofit of Memphis hospital, removing nine floors, bringing it to California standard Does this make sense? How can we help society decide?

2. Because most earthquake-related deaths result from the collapse of buildings, the primary defense against earthquakes is designing structures that should not collapse. We want to assess the seismic hazard and chose a level of safety that makes economic sense, because such design raises construction costs and diverts resources from other uses. ”Earthquakes don't kill people; buildings kill people.”

3. Building codes should not be too weak, permitting unsafe construction and undue risks, or too strong, imposing unneeded costs and promoting evasion. Deciding where to draw this line is a complex issue for which there is no unique answer. ”Earthquakes don't kill people; buildings kill people.”

4. 1999 Chi-Chi earthquakeTaiwan Tsai et al, 2001 ”Earthquakes don't kill people; buildings kill people.”

5. There’s no clear division between economic/policy and science/engineering issues In particular, the definition of “hazard” (number of years/probability over which to plan for maximum shaking) is economic/policy based Challenge is to develop sensible policies that balance costs and benefits, given what we know and don't know about future earthquakes and their effects. There’s no right answer, so society has to chose what to do.

6. Difficulties: Estimating hazards requires assumptions about the size, recurrence, and shaking from future earthquakes, which often are poorly known. Need to chose definition of seismic hazard, which is even more arbitrary and at least as significant as assumptions about future earthquakes. 3) Mitigating risks involves economic and policy issues as well as the scientific one of estimating the hazard and the engineering one of designing safe structures

7. U.S. average 10-20 deaths per year, but can be many more for large earthquake Some foreign countries much more (more people living along plate boundary, different construction)

8. U.S. EARTHQUAKES Infrequent, but occasionally major, fatalities and damage Moderate (M 6.7) 1994 Northridge earthquake: 58 deaths, $20B damage Challenge: find mitigation strategy that balances cost of safer construction with benefits, given other possible uses of resources Tough problem!

9. ORGANIZATIONAL ISSUE (in US) Because There are no unique or correct mitigation strategies There’s no clear division between economic/policy and science/engineering issues Different public and private organizations with different perspectives - none of which are charged with looking at the problem as a totality - take different approaches.

10. Organizations (public or private) focusing on economic development tend to discount hazards San Andreas Fault not mentioned NASA

11. Can get huge range of probabilities, depending on assumptions of magnitude and recurrence SOME EMERGENCY MANAGEMENT GROUPS EXAGERATE HAZARD “Seismologists have predicted a 40-60% chance of a devastating earthquake in the New Madrid seismic zone in the next ten years. Those odds jump to 90% over the next 50 years. The potential magnitude of a catastrophicNew Madrid quake dictates that we approach the preparedness on a regional basis" Stein et al., 2003

12. “Catastrophic” & “devastating” defined as M>6 … which occurs ~ every 150 years somewhere in the New Madrid zone - most of which isn’t densely populated The largest in the past century, 1968 (M 5.5) Illinois earthquake, caused no fatalities. Damage consisted of fallen bricks from chimneys, broken windows, toppled television aerials, and cracked or fallen brick & plaster.

13. Organizations with quasi-regulatory duties (BSSC, FEMA, USGS) focus on reducing losses in future earthquakes without considering cost of mitigation measures or how this use of resources should be balanced with alternative uses

14. HOW CAN WE TAKE A BROADER, INTEGRATED, VIEW? Post-tsunami cleanup, Banda Aceh

15. THOUGHT EXPERIMENT: TRADEOFF Your department is about to build a new building. The more seismic safety you want, the more it will cost. You have to decide how much of the construction budget to put into safety. Spending more makes you better off in a future large earthquake. However, you’re worse off in the intervening years, because that money isn't available for office and lab space, equipment, etc.

16. THOUGHT EXPERIMENT: TRADEOFF Deciding what to do involves benefit-cost analysis. You try to estimate the maximum shaking expected during the building's life, and the level of damage you will accept. You consider a range of scenarios involving different costs for safety and different benefits in damage reduction. You weigh these, accepting that your estimates for the future have considerable uncertainties, and somehow decide on a balance between benefit and cost.

17. THIS PROCESS, WHICH SOCIETY FACES IN PREPARING FOR EARTHQUAKES, ILLUSTRATES TWO PRINCIPLES: “There's no free lunch” Resources used for one goal aren’t available for another This is easy to see in the public sector, where there are direct tradeoffs. Funds spent strengthening schools aren’t available to hire teachers, upgrading hospitals may mean covering fewer uninsured (~$1 K/yr), stronger bridges may result in hiring fewer police and fire fighters (~$50 K/yr), etc...

18. THIS PROCESS, WHICH SOCIETY FACES IN PREPARING FOR EARTHQUAKES, ILLUSTRATES TWO PRINCIPLES: “There's no such thing as other people's money” Costs are ultimately borne by society as a whole Imposing costs on the private sector affects everyone via reduced economic activity (firms don't build or build elsewhere), job loss (or reduced growth), and the resulting reduction in tax revenue and thus social services.

19. Following hospital collapses in 1971 San Fernando earthquake, California required seismic retrofits Law assumed retrofits would be cheap In fact, retrofit cost close to that of new buildings At least $24 B needed ! No funding available After 37 years, slow progress Deadlines already extended Won’t be done before at least 2030 20% of Californians - 6.6 M people - have no health insurance Retrofitting California Hospitals

20. RECOGNIZE THAT ALTHOUGH SCIENCE AND ENGINEERING ARE IMPORTANT, ISSUES ARE ULTIMATELY ECONOMIC & SOCIETAL There are no unique or correct strategies, so society has to make tough choices. A few % cost increase may decide whether a building is built or renovated, or whether other worthy programs are conducted. Our goal is to use what we know about earthquake hazards and recurrence to help society decide how much to accept in additional costs to reduce both the direct and indirect costs of future earthquakes. This involves detailed analysis, which we don't have yet, of the costs and benefits of various policies. The strategy chosen shouldn't be a technocratic decision to be imposed from above, but one made openly through the democratic process on the community level - where the costs and benefits of the policy accrue.

21. SHOULD MEMPHIS BUILDINGS MEET CALIFORNIA STANDARD? New building code IBC 2000, urged by USGS/FEMA, would raise to California level (~ UBC 4) Essentially no analysis of costs & benefits of new code Initial estimates suggest cost likely to exceed benefits Detailed study needed to see if justified Year Code J. Tomasello

22. INITIAL BENEFIT/COST ESTIMATES: MEMPHIS I: Present value: FEMA estimate of annual earthquake loss for Memphis area ($17 million/yr), only part of which would be eliminated by new code ~ 1% of annual construction costs ($2 B) Seismic mitigation meeting new code might cost more

23. INITIAL BENEFIT/COST ESTIMATES: MEMPHIS II: Life-of-building: FEMA estimatesannual earthquake loss ratio (AELR), ratio of annualized earthquake loss to the replacement cost of all buildings in the area = 4 x 10-4. Equivalent to average annual loss in building value, so in 50 yr building loses 2% of value. If loss halved by new code, than over 50 yr new code saves 1% of building value. If seismic mitigation cost increase for new code >> 1%, probably wouldn't make sense.

24. FEMA BUILDING RISK COMPARISON Uses Frankel et al. map hazard (high end of possible values) to estimate annual earthquake loss ratio (AELR), ratio of annualized earthquake loss to the replacement cost of all buildings in the area. Memphis and St. Louis values ~1/5 - 1/10 of those for San Francisco and Los Angeles. Memphis 32nd among major U.S. cities; St. Louis 34th. Since ratios are equivalent to the fractional risk of building damage, estimate predicts NMSZ buildings 5-10 times less likely to be damaged during their lives than ones in California. Searer et al, 2005

25. 2) THOUGHTFULLY ADDRESS LIFE SAFETY ISSUES The issue is how to balance this benefit with alternative uses of resources (flu shots, defibrillators, highway upgrades, etc.) that might save more lives for less. Estimated cost to save life (in U.S.) varies in other applications: ~$50 K highway improvements ~$100 K medical screening ~$5 M auto tire pressure sensors Different strategies are likely to make sense in different areas both within the U.S. and elsewhere, depending on the earthquake risk, current building codes, and alternative demands for resources.

26. 3) EXPLAIN UNCERTAINTIES Individuals and society are used to making decisions in the presence of uncertainty: we buy life insurance and decide how much to spend on safety features in cars. Business and political leaders routinely consider risks in deciding whether and how to invest large sums.

27. One way to present uncertainty - show hazard for different assumed magnitudes & ground motion models Stein et al, 2012 Newman et al, 2001

28. 4) AVOID OVERESTIMATING HAZARD Estimates biased toward high ("conservative") values distort policy decisions by favoring seismic safety over other resource uses. Don’t want poor education in earthquake-safe schools, or to turn away patients from earthquake-safe hospitals Need careful balance

29. 5) HAZARD ASSESSMENTS AND MITIGATION POLICIES SHOULD UNDERGO DISINTERESTED PEER REVIEW Best results come when review process is at arm's length. Hazard estimates prepared by one organization should be reviewed by a different one. This would ensure that crucial economic and societal issues are fully explored before a decision is made.

30. 6) TAKE THE TIME TO GET THINGS RIGHT Because major earthquakes in a given area are infrequent on human timescale, we generally have time to formulate strategy carefully (no need to rush to the wrong answer) Time can also help on both the cost and benefit sides. As older buildings are replaced by ones meeting newer standards, a community's overall earthquake resistance increases. Similarly, even where retrofitting structures isn't cost-effective, higher standards for new ones may be. Technological advances can make additional mitigation cheaper and hence more cost-effective.

31. Eventually, if our understanding of earthquake probabilities becomes sufficient to confidently identify how large earthquake probabilities vary with time, construction standards could be adjusted accordingly where appropriate. Hebden & Stein, 2008

32. 7) DON’T RELY ON UNFUNDED MANDATES Society - who benefits from more safety - should assume cost rather than impose cost on property owners who don’t benefits (can’t charge higher rent) and thus resist Can then decide if worthwhile - is public willing to pay higher taxes for safety?

33. 8) BENEFIT FROM RESEARCH ON OTHER ISSUES WHERE SOCIETY FORMULATES HAZARD MITIGATION STRATEGIES IN SITUATIONS WITH LARGE UNCERTAINTIES There's increasing recognition of the need to make policy more rationally. The challenge, summarized by a joint project of Brookings Institution and American Enterprise Institute is that “The direct costs of federal environmental, health, and safety regulations are probably on the order of $200 billion annually, or about the size of all federal domestic, nondefense discretionary spending. The benefits of those regulations are even less certain. Evidence suggests that some recent regulations would pass a benefit-cost test while others would not.”

34. Using seismology, engineering, economics and policy in an integrated approach to hazards mitigation will best for society We will do better as we learn more about earthquakes and their effects in different areas