Benefits and Costs of Earthquake Resistant Buildings

The benefits of construction earthquake resistant buildings are the savings in property damage, injuries, and lives that accrue in the event of an earthquake. The costs are the additional resources required to ensure that buildings are resistant. In certain regions of the U.S., particularly in California, earthquake resistant buildings are commonplace. As we will show, the cost of adding this resistance to buildings is about seven billion dollars in Los Angeles County alone. The purpose of this paper is to present a methodology for estimating these costs as well as the benefits of resistance. The methodology draws upon the economic approach to valuing risks to life, as well as recent engineering and geological studies of earthquakes and the damage they cause. Our results should be useful both to policy makers concerned with whether the current level to precautions taken to mitigate earthquake losses are adequate, and to economists confronted with evaluating the precautions taken by society against natural hazards in general.