A Socioeconomic Impact Assessment
of
Earthquake scenarios on the
Jamaican Economy
(2005)
Presenter: Maurice Mason
UWI Institute for Sustainable Development
1/21/2014
1
Objective:
Simulate the economic cost and likely impact
of a magnitude 6.5 earthquake on the
Jamaican Economy and the KMA
Estimation Methodologies:
Input-Output Analysis for loss in
production
•
• ECLAC methodology for direct and
indirect damage
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MMI
Possible Impact
V
Unstable Objects overturned
VI
Slight Damage
VII
 Negligible damage engineered structured
 considerable damage in poorly built or badly designed
structures
VIII
 significant damage to poorly built structures
IX
 significant damage and or Partial collapse
 Foundations impacted
X
Collapsed buildings, most masonry and frame structures
destroyed with foundations
XI
Few masonry and frame structures remained standing
XII
Damage total. Lines of sight and level are distorted. Objects
thrown into the air.
USGS : http://earthquake.usgs.gov/learn/topics/mag_vs_int.php
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3
1907 Scenario: M6.5 earthquake MMI Intensity Map
VIII
VII
VI
IX
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Tuesday,
2014
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Kingston and St. Andrew Scenario
National Chest Hospital
MMI >IX
Bustamante Children Hospital
MMI >IX
Andrews MI >IX
Nutall; MI >IX
KPH; MI >IX
Jamaica
Defence Force
MMI >IX
Kingston Wharf –
MMI >IX
Petrojam Refinery
MMI - IX
Hunts Bay
MMI -IX
Rock Fort
MMI > IX
NMIA – tourist
& air cargo
MMI >IX
Damage Classification
• Socioeconomic Damages:
– Schools,
– Residential Infrastructure
• Economic/Productive infrastructure
– Building and Installations
– Machinery and Equipment
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Potential Damage
Transportation Sector : Land, Sea and Air (Lifeline Sector)
F)acility
MMI Exposure
Capacity at risk
Kingston Wharf
‐120, 000 containers in yard at any moment > IX
•
•
Ocho Rios Port
‐ 326 Cruise Ships annually
VII
60% of Cruise Ship arrivals
Norman Manley Airport
> IX
Airport Facility 50%
Port facilities 60%
Transshipment 100%
Electricity Generation Capacity
Region
Value at Replacement Cost
MMI Exposure Capacity at risk
Hunts Bay
US$117 Mn
> IX
Over 75%
Rockfort
US$117 Mn
> IX
Old Harbour
US$117 Mn
VIII
Main Hospitals
UHWI , KPH, Kingston Public Hospital, Bustamante Children Hospital
MMI Exposure
Capacity at risk
> IX
80%
Montego Bay Regional Hospital IV
15%
Mandeville Hospital
V
5%
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Potential Damage Cont’d
Residential Housing
National
Value at Replacement Cost
MMI Exposure
Value at Risk
658,850 units
US$32.6 Bn
At least VI
70 %
Source: Smith, D “Caribbean Catastrophe Risk Insurance Facility: results from Risk Modeling” EQECAT, Inc
Government Buildings Location
Value at Replacement Cost
MMI Exposure
Value at Risk
National
US$3.4 Bn
At least VI
70 %
Source: Smith, D “Caribbean Catastrophe Risk Insurance Facility: results from Risk Modeling” EQECAT, Inc
1/21/2014
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Economic significance
of the
Earthquake Zone (MMI: V – XI )
Affected Economic Sectors
•
•
•
•
•
•
•
•
•
•
Mining and Quarrying
Agriculture
Manufacturing
Electricity and Water
Construction and Installation
Distributive Trade
Transport, Storage and Communication
Finance and Insurance Services
Real Estate
Hotels
Contribution to GDP
(2005)
5.8%
5.2%
13.3
4.1%
10.6%
21.8%
13.9%
8.2%
5.2%
6.6%
94.6 %
Source: Statin, 2006, “ Quarterly GDP”. Vol. 5 No. 2 (April – June 2006)
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Estimated Direct Damage
•Infrastructure
Munich Re – Probable
Maximum Loss
Value
Probable Loss
(US Mn)
Calculation Model At Risk
Estimated at 15% loss
of infrastructure
(US Mn)
Electricity
Residential
Housing
Government Bldg
Water
Total
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351
32,600
52.65
4,890
3,400
659
510
98.85
US$5,551.5
10
Indirect Losses
Production and Employment
Losses
Estimated via Input Output
Analysis
Production Impact
 Indirect Interruption
 Communication
 Lifeline Services
 Water
 Drainage
 Electricity
 Road Networks
 Labor Input Interruption
 Population Dislocation
 Transportation Interruptions
 Products and Services Output Interruption
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Production Time Loss
(estimated)
• Assumptions:
– Earthquake occurs on January 10, 2005.
– Output for first quarter and 50 % of second
quarter is lost, (JPS expected down time)
Sector
Loss in Production
Agriculture, Forestry & Fishing
38%
Mining
38%
Manufacturing
39%
Construction & Installation
37%
TRANS & DISTR
38%
Finance & Insurance Services
38%
Hotels, Restaurants & Clubs
40%
Others
Tuesday, January 21,
38%
2014
13
Value of Supply Shock
(estimated)
• The negative supply shock represents the
short run imbalance and the source of inflation
after natural disaster
Lost in Production: US$2 Bn
Tuesday, January 21,
2014
14
Disaggregated Losses
(estimated)
Total Loss In output
Total Loss in
economic
activity
US$ 6,488,Bn
80000
70000
60000
50000
40000
30000
20000
10000
0
Loss
Agriculture
Tuesday, January 21,
2014
Mining
Mftg
Constn &
Installation
TRANS &
DISTR
Finance
Hotels
Others
15
Loss in Employment
persons employed
Loss in Employment
(estimated)
250000
Employment
Losses:
200000
911,705
150000
100000
50000
0
Agriculture
Tuesday, January 21,
2014
Mining
Mftg
Constn &
Installation
TRANS &
DISTR
Finance
Hotels
Others
16
Summary Findings
• For a given earthquake, vulnerability varies by
soil type
• Infrastructure damage was estimated at US$5.5
bn or 15 percent of pre-disaster socioeconomic
infrastructure. (Munich Re).
• Employment losses amounting to 911,705 for
approximately 4.5 months.
• Affected sectors contributes approximately
95% of the GDP
• Direct Indirect Loss in GDP is US$6.488Bn.
Tuesday, January 21,
2014
17
Implication
• Building codes should be adjusted for variation
in soil type
• Capital base of the local insurance companies
would be insufficient to cover such insurance
claims.
• Viability of the regional insurance sector is
questioned
• Limited options to finance recovery efforts
• Recovery financing could cause increase
Fiscal and BOP deficits…
• Stagnated long term growth potential