Introducing loss transfer functions to model seismic financial loss: A case study of Iran

Abstract

Vulnerability curves in seismic risk studies, represent the relation between mean damage or loss ratio and some earthquake intensity parameter(s). Mostly, these curves are developed based on observed damage ratios caused by actual events or analytic evaluation of seismic performance of different building typologies. Exclusively employing these models to estimate the financial loss by considering the damage ratios as the economic loss ratios, disregards the fact that beyond some physical damage levels the structures becomes practically irreparable and a total loss must be assumed accordingly. Moreover, the incurred economic loss to the asset and the repair cost are not differentiable. In this paper, a method is introduced in order to convert the physical damage ratio into - economic loss considering the definitions of physical damage states and total loss thresholds. Using these curves and considering the physical vulnerability functions and their variations, the economic vulnerability curves are developed. As a case study for model implementation, the seismic loss curves and maps are obtained using the OpenQuake platform for the residential building stock of Iran, simulating 100,000 years of events. The findings reveal an average annual damage of 9.9 million square meters requiring US$ 2.7 billion equivalent to 0.57% of total assets value, to repair or to reconstruct the damaged buildings to return to the status quo ante and a total of US$ 3.3 billion including the betterment costs. The findings of this kind imply the significance and the versatility of employing the loss transfer functions to various incurred costs by such disastrous events.