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Economic Consequences of Earthquakes: Preparing for the Unexpected

by George C. Lee

Director, Multidisciplinary Center for Earthquake Engineering Research
State University of New York at Buffalo

Let me state the obvious. Earthquakes are unexpected events. They can strike almost anywhere at any time, and instantly, without warning. They can ravage our built environment, sever important utilities and lifelines, endanger our lives and those of our loved ones, and rock our sense of security and economic stability. The economic consequences of earthquakes can be enormous. We must consider preparing for the unexpected.

Earlier this year, as the world's eyes focused on the tragedy of Kobe, the questions of "What if...?" surfaced in people's minds. As unfortunate as they are, tragedies the magnitude of Kobe do tend to help us focus a little better. Questions of "What if such an earthquake were to happen here?...Are we prepared for such an event?...What would the damage be?...How high might the death toll climb?...How would the economy be impacted?...What can be done to mitigate such a disaster?" were asked from near and far.

Suddenly, the fear created in Kobe had focused worldwide attention on vulnerabilities elsewhere. But almost as quickly as the questions were raised, they were forgotten. Soon, other news swept the suffering of Kobe off of the front page, and "more pressing" issues took hold of the world's daily priorities, cutting short the attention span to prepare.

In the United States, the earthquake threat is relatively well known and attended to in California. In other parts of the country, however, particularly the eastern and central United States, it is still largely ignored. While it is true that in these parts, the probability that a severely damaging earthquake will occur is low in comparison with the west coast, the consequences could be much greater as a result of our aging buildings and infrastructure, and overall lack of preparedness.

The papers in this volume by experts in various fields of endeavor examine the implications of a Kobe-type disaster in the United States. They review the earthquake threat and the type of damage that could be caused to various important facilities and infrastructure, and they examine the impact of this damage on business and the economy.

The papers review the obvious —the direct economic impacts caused by physical damage to our built environment. They also consider the indirect impacts that such an event can have on our economy, such as lost manufacturing capacity, crippled distribution channels, diminished revenues, unemployment, and lack of spending. They examine some prescribed precautionary measures to minimize risk and limit exposure to large-scale damage and losses. But unfortunately, there is not enough space to ponder answers to all questions. Consequently, we must continually raise these questions over time.

In April 1995, The Economist published what is called its "survey of earthquake engineering," in which the author examined the Kobe and Northridge earthquakes, and pondered our future safety from such disasters. Among the items covered in the article were seismology, engineering and risk management. In fact, a number of the authors of the papers in this volume shared their views in the story.

As Director of the National Center for Earthquake Engineering Research, I felt it important that I respond to the publication and commend them for their efforts in bringing this issue before its readership. I would like to share some of what I wrote to the editor of The Economist, because I feel that it summarizes the purpose of the papers in this volume and emphasizes a few key action items.

Is society willing to take the necessary steps to prevent the massive destruction and hardship caused by these terrible temblors?

First, we must understand the risk to which we are exposed. Earthquakes can strike almost anywhere...In fact, the eastern and central United States have historically experienced large disturbances, which if to recur today, would likely cause widespread destruction, with decided economic aftershocks.

Upon examining the risk, society must ponder options for preparedness, allocate resources (financial and other) and implement the necessary strategies. Now, in the wake of the $110 billion Kobe castrophe, such considerations are prevalent, but for how long will the discussions continue before "more pressing" issues of the day overtake the priority to plan for the unexpected? It has happened time after time before., what can be done to help society focus more intently on the benefits (life safety and cost) of advance preparation against one of nature's most dangerous occurrences? Initially, education and public debate — education, to help decision makers fully understand the potentially catastrophic consequences to which we are exposed, and public debate, to reach a consensus on economically-feasible and socially-acceptable solutions.

New York City, where these papers were presented, is the epicenter of the world's trade and financial markets. The authors who examine this issue together are engineers, seismologists, public officials, insurance executives, risk managers, emergency planners, economists, financial experts, and others — a multiplicity of disciplines. It is my hope, that through our combined knowledge, we might begin the process of education and public debate. Further, I hope that these proceedings might carry our discussions to the world to further stimulate debate, so that consensus might be reached and precautions put in place. That is our challenge. Remember, we are the "experts" that people will turn to for answers in the wake of the next disaster.

It has been said that even the longest of journeys begins with one small step. The papers that follow can be seen as initial steps toward safeguarding ourselves from the destructive forces of earthquakes. Society must come to realize that while earthquakes are and always will present a natural hazard, solutions do exist to prevent them from becoming great natural disasters. We must get on with the business of seeking these solutions.

I wish to extend my grateful appreciation to our sponsors: The National Science Foundation, the State of New York, and the Federal Emergency Management Agency for their financial support of this effort.

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