A report released today by a Wellington risk consultancy, Tailrisk Economics, finds that there are serious flaws in the way earthquake prone buildings are designated, which will have hugely detrimental effects on New Zealand’s economy, communities and individuals.
The report’s author, Ian Harrison, states that the critical ‘earthquake prone’ building trigger point of 34 percent of new building code was decided arbitrarily and has no supporting analysis or sufficient regard for costs and benefits.
“No other country applies across the board national earthquake strengthening standards because it is economically illogical to do so,” Mr Harrison says. New Zealand’s attempt will cost over $10 billion, but produce benefits of under $100 million. The current framework values an Aucklander’s life at about 3,000 times higher than a Wellingtonian’s”.
“Applying a sensible cost benefit analysis and internationally recognised life safety standards would likely show that only a small proportion of the buildings currently designated as ‘earthquake prone’ would be excessively risky”, he says.
The report also finds that policy decisions were effectively made by industry groups, rather than the Government, and that ministers were not properly or accurately informed of the process.
Ian Harrison is a specialist in low probability, high impact events such as financial crises and natural disasters. He has worked for the Reserve Bank of New Zealand, the World Bank and the International Monetary Fund.
The report is available online at http://www.tailrisk.co.nz/documents/ErrorProneBureaucracy.pdf