Earthquakes Cost US $14.7 Billion Annually in Losses

Earthquakes cost the nation an estimated $14.7 billion annually in building damage and associated losses according to a new report released jointly in April, 2023 by the U.S. Geological Survey and the Federal Emergency Management Agency at the annual Seismological Society of America meeting.

Although most economic loss is concentrated along the west coast, the distribution of relative earthquake risk, as measured by the Annualized Earthquake Loss Ratio (AELR), is spread throughout the country and it reinforces the fact that earthquakes are a national problem. The AELR expresses estimated annualized loss as a fraction of the building inventory replacement value as shown in figure above.

“This study reinforces the nation’s need to be proactive about making communities safer from threats like earthquakes,” said FEMA Deputy Administrator Erik Hooks. “This includes adopting the latest seismic building codes and investing in earthquake resilience projects. FEMA remains committed to supporting communities across the nation through our various programs to reduce vulnerability not just to earthquakes but all natural hazards.”

Understanding how much earthquakes could cost the U.S. is a priority of the National Earthquake Hazards Reduction Program and is critical for informing decisions about mitigation policies, priorities, strategies and funding. USGS science on earthquake hazards and FEMA’s latest Hazus 6.0 loss-estimation software release were critical components of this analysis.

Even though most of the economic losses are concentrated in California and along the West Coast due to that region’s high seismic hazard levels, significant population, and building exposure, earthquake risk is spread throughout the country. For example, there is a combined $3.1 billion per year in projected losses across the central U.S., Rocky Mountain region, Alaska, Hawaii, Puerto Rico and the Virgin Islands.

This reinforces the fact that earthquakes are a national problem.

Annualized loss—the metric that seismologists used in the report—is derived from combining earthquake hazards, building exposure, and vulnerability, and thus it represents a long-term average. The Annualized Earthquake Loss Ratio expresses the estimated annualized loss as a fraction of the building-inventory replacement value.

The new estimate includes a significant nationwide effort to improve earthquake-hazard data and the baseline building-exposure data now valued at $107.8 trillion that benefited from the U.S. Army Corp of Engineers National Structure Inventory.