Reduced-Form Economic Consequence Estimating Tool:

Earthquakes

Adam Rose (PI) and

Nat Heatwole (Co-PI & Research Transition Lead)

1/5/15

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Project Objectives

• Research goals– rapidly estimate economic consequences of hazard

events using simple and transparent, yet defensible, models

– provide this loss estimation capability in a compact, user-friendly software tool

• Research transition goals– ensure reduced-form earthquake tool is transitioned

to the maximum number of users– expand reduced-form modeling approach to other

types of hazards

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DHS Interest and Motivation

• Why DHS would be interested– rapid loss estimates for resource mobilization (ex

post) or benefit-cost analyses (ex ante)– minimal user inputs– straightforward outputs & uncertainty bands

• Potential DHS contact agencies– Domestic Nuclear Detection Office (DNDO)– Federal Emergency Management Agency (FEMA)– state/local first responders & emergency

management officials

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Potential non-DHS Stakeholders• Federal agencies

– National Oceanic and Atmospheric Administration (NOAA)– U.S. Depts. of Agriculture, Defense, Interior, & Transportation– U.S. General Services Administration (GSA)– U.S. Geological Survey (USGS)

• State/local agencies– California Earthquake Authority– California Emergency Management Agency– California Governor’s Office of Emergency Services– Los Angeles Dept. of Water and Power (LADWP)

• Others– academics/researchers– insurance firms

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Interfaces to Related Research

• Others working on this– U.S. Geological Survey (USGS), Prompt Analysis of

Global Earthquakes for Response (PAGER) program

• Interfaces with others in this field– reduced-form modeling approach used:

• by Rose, Heatwole, Dixon et al. in a CREATE report to the U.S. Nuclear Detection Office (DNDO)

• by Heatwole in a statistical analysis of economic cost of non-fatal injuries in terrorist attacks

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Research Technical Plan

• Use data from SHELDUS (Spatial Hazard Events and Losses Database for the U.S.); supplement with primary data from media reports

• Formulate reduced-form model of property damage in major U.S. earthquakes as function of:– hazard-related variables (e.g., Richter magnitude)– exposure-related variables (e.g., population, income)

• Choose predictor variables for model using step-wise regression analysis

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Research Transition Plan

• Work with Erroll & DHS to identify potential users - FEMA contacts

- Professor Bill Siembieda for California contacts

- NGOs (e.g., Red Cross, World Bank)

• Improve presentation of Rapid EQ Tool - improve statistical fit

- provide back-cast estimates of actual events

• Present model to customers

• Complete work on tornado example

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Milestones and Schedule/Timeline

Action Date

Identify potential users February 15

Improve presentation of Rapid EQ tool

March 1

Present model to customers March 1 to May 31

Complete work on tornado version May 1

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Screenshot from Tool