Direct and Indirect Economic Losses from Earthquake Damage

Abstract

Earthquakes generate a variety of economic impacts. To obtain a consistent measure, the actual damage state must be linked to the dollar losses of the capital stock, and then translated into direct business interruption losses and the ensuing ripple effects that occur throughout the economy. The Earthquake Loss Estimation Methodology (HAZUS) facilitates a consistent set of loss estimations. The direct loss module of HAZUS calculates loss estimates for repair and replacement of building stock (structural and nonstructural), building contents and inventory, and business interruption losses. The direct losses information provides the inputs to the indirect loss module. The indirect loss module estimates the impacts by economic sectors over time and accounts for both earthquake-induced supply shortages and demand reductions. The results of a case study are presented that focus on the economic impacts of various scenario earthquakes that might occur in the Boston metropolitan area.