News release from Ian Harrison
Proposals released by the Ministry of Business, Innovation and Employment in December on the earthquake strengthening of existing buildings, used a test of ‘earthquake prone’ building which is much more severe than defined in law, leading to the incorrect conclusion that there are 15,000 to 25,000 earthquake prone buildings in New Zealand likely to collapse in a moderate earthquake.
“In fact very few buildings are likely to collapse in a moderate earthquake” said Ian Harrison, Principal at tailrisk economics and author of a research paper examining the government proposals released today.
Some councils are currently using the test to designate earthquake prone buildings, causing building owners to incur substantial unnecessary costs. It is likely that most of their designations would not survive a legal challenge.
“Also”, Harrison said, “the proposals will save only 0.25 lives a year at a cost of over $4 billion. If this money was put into road safety it could possibly save over 20 lives a year”.
Harrison’s paper focuses on the cost benefit analysis of the proposal, starting with the Ministry expert’s own analysis which shows the costs are 50 times the benefits. Harrison found the cost benefit ratio for earthquake strengthening in Auckland to be 1762. For the proposals to be beneficial to society the costs need to be less than the benefits.
Harrison’s paper recommends the government scrap the current proposals and develop earthquake strengthening standards and policies which are based on sound, transparent and disinterested analysis. He also recommends councils withdraw earthquake prone classifications which are not based on the legal definition of earthquake prone.
Link to the Ministry of Business, Innovation and Employments proposals document: www.dbh.govt.nz/consultingon-epbp-consultation-document
Ian Harrison (B.C.A. Hons. V.U.W., Master of Public Policy SAIS Johns Hopkins) has worked with the Reserve Bank of New Zealand, the World Bank, the International Monetary Fund and the Bank for International Settlements