Earthquake preparedness – a collective action problem

Seismologist Dr. Lucy Jones recently retired from her three decade stint at the U.S. Geological Survey and gave an exit interview with NPR about the state of Earthquake preparedness in the United States. According to Dr. Jones in the last 30 years society in general has come around to the idea that a devastating earthquake is inevitable. ‘The big one’ (as it is so ominously referred to) doesn’t necessarily mean we are all going to die, as considerable effort has been put into building codes to ensure that buildings don’t collapse. However, Dr. Jones is quick to point out the distinction between not falling down, and being usable after the event. She believes spending an extra one or two percent to reach the next threshold of earthquake preparedness could avoid the pitfalls of bankruptcy or decades long regional depression after a quake.

This poses an interesting collective action problem – or a situation where individual interest and group interest diverge. What incentive is there for an individual building owner to upgrade their building to the point that it will be usable after an earthquake if everyone else in the area only reaches the minimum standard? The individual could argue that there is no reason to upgrade their building, because if they did and no one else did the whole region would still suffer a depression regardless.

A further issue is that theoretically every citizen in the region benefits from the building owners upgrading their building, but aren’t obliged to contribute to the cost of an upgrade – aside from the increased cost of rent. A building owner may consider this unfair and only opt for the minimum standard prescribed by the code.

How can we combat this collective action issue? One way is by increasing minimum standards to a level that would ensure buildings not only do not collapse but remain usable, however this blunt instrument to enforce change may be prohibitively expensive and an overbearing and politically unpalatable move. Another mechanism could be to introduce tax incentives as a way of sharing the burden between all those who would benefit from all buildings being complaint (being society in general). A third, light touch, option could be to leave the problem in the hands of the market and rely on consumer demand for stronger buildings to resolve the issue.

There are obviously no easy answers to a very real problem which could be (and has indeed been) devastating to some of New Zealand’s high earthquake risk cities.

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