Calif. Sits on Epicenter of National Quake Survey

According to the first national survey of earthquake risks, 75 percent of all losses are expected to occur in California. But quakes are not a problem for just the Golden State, as the study shows that other areas of the country have their share of earthquake exposure.

Other cities at risk include Anchorage; Seattle; Tacoma, Wash.; Portland, Ore.; Salt Lake City; Las Vegas; Reno; Memphis, Tenn.; Charleston, S.C.; Albuquerque; Atlanta; Newark, N.J.; and Honolulu. Released on Sept. 20 at the National Earthquake Risk Management Conference in Seattle, the study is based on loss estimates generated by Hazards U.S. (HAZUS), a Geographic Information System-based earthquake loss estimation tool, developed by the Federal Emergency Management Agency (FEMA) in cooperation with the National Institute of Building Sciences.

Rather than relying on historical data to estimate potential losses from future quakes, FEMA researchers added information about local building inventories, economic data and other details, making it the first study of its kind to apply probability data.

According to Brian Cowan, senior policy advisor to FEMA’s director, there were three reasons FEMA decided on a study of this caliber. “We wanted to put the Hazards U.S. loss estimation model through some paces, but more specifically, by going through a study of this sort we might be able to get across the message…that would make for a better perception of risk and a better perception of hazard,” Cowan said. “And the third purpose, by having Hazards U.S., we’re able to quantify earthquake losses-actually put a number on them that can be compared from one region to another.”

When asked how insurers can utilize the information revealed in this study, Cowan answered, “At the least, an insurer might get the same use from it that we would get-being able to compare risk on an equal basis in different regions of the country.” This study, he said, uses a model that probably closely resembles some of the proprietary models that have been available to insurance companies over the years in proposing their rates to commissioners for earthquake coverage.

FEMA researchers used U.S. Geological Survey data on the quake hazards of roughly 150,000 points across the country. By using two interrelated risk indicators-the Annualized Earthquake Loss (AEL) and the Annualized Earthquake Loss Ratio (AELR)-the study estimated seismic risk in all regions of the U.S.

And although the western U.S. seems plagued by quakes, with the Los Angeles and San Francisco Bay areas accounting for 86 percent of the total annualized losses in the U.S., the distribution of relative earthquake risk, as measured by AELR, reinforced the fact the quakes are a national problem.

The HAZUS analysis indicates that “the AEL to the national building stock add up to roughly $4.4 billion a year, with California alone accounting for $3.3 billion of the estimated damage costs. The overall estimate is extremely conservative and includes only capital losses such as repairing or replacing buildings, contents and inventory ($3.49 billion) and income losses-business interruption, wage and rental income losses ($0.93 billion).”

In comparing earthquake losses to the losses experienced from floods and hurricanes, National Weather Service data showed annual flood losses totaling $5.2 billion between 1989 and 1998, and the National Climatic Data Center estimates $5.4 billion in annual hurricane losses for the same period. “It makes you begin to wonder what strategically we should do…sometime in the future in terms of trying to implement an all-hazards risk management policy,” Cowan said.

According to FEMA Director James Lee Witt, the risk of damage from an earthquake has grown substantially over the years, mainly because of the population growth in seismically active areas; and the high concentration of loss in California is consistent with the state’s high seismic hazard and large structural exposure.

“The risk is a combination of the hazard plus the vulnerability,” Cowan said. “And as we learned in Northridge, even though people don’t die in these buildings, there’s still a significant economic loss.” The survey reveals the need for a focus on rehabilitation of existing buildings in the most vulnerable communities (i.e. the Los Angeles and San Francisco Bay areas).

“We’re looking at this study as Step 1, and there are a few things that we want to do in next generations of studies,” Cowan said, explaining that in addition to revisiting this issue, FEMA wants to add to the study in two ways: 1) to expand the number of hazards being looked at (for a more all-hazards approach for emergency management), and 2) to expand beyond buildings.

FEMA believes that this study not only represents an important benchmark in a long-term effort to analyze, rank and compare seismic risk across regions in the U.S., but it also contributes to the long-term goal of the National Earthquake Loss Reduction Program.

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