ECONOMIC CONSEQUENCES OF EARTHQUAKE

Saket Kumar1, Dr. A. K. Sinha2

1. Student, PG Structural Engineering, National Institute of Technology, Patna

2. Professor , Department of Civil Engineering, National Institute of Technology, Patna

ABSTRACT
Earthquake is one of the most devastating disasters. It cannot be predicted precisely with present
knowledge base hence preparedness is very necessary. We can learn as many lessons as possible from the
past earthquakes. A scientific understanding of the event that occurred may make it possible to anticipate
future earthquake’s consequences, there and elsewhere, so as to cope up with them more effectively.
From last few decades, the augmentation of investments in buildings, equipments and infrastructure are
mounting at enormous rates. This is making the economic losses of seismic events greater and greater
every year, and hence it becomes pertinent to estimate economic loss precisely as its consequences are
drastic and long lasting. Estimating the economic loss from the earthquake is also important for devising
policies and drawing up requirements for assistance both from within and outside India.
This paper assimilates the investigations of economical losses and makes a comparative study to
analyze the variations in the losses during three major earthquakes of India which are Gangtok, Sikkim
Earthquake (18th sept2011); Bhuj, Gujarat Earthquake (26th jan2001); and Latur, Maharashtra Earthquake
(30th sept1993).
INTRODUCTION

Earthquakes generate a variety of economic impacts and these impacts adversely affect the economy of
the country or state. The economic impact of an earthquake or any natural disaster can be classified as: (i)
losses to immovable assets, (ii) losses to movable assets (iii) economic losses due to business interruption,
(iv) public sector economic costs, and (v) household income losses due to death, injury, and job
disruption. The first impact consists of the direct economic losses due to destroyed or severely damaged
buildings and other structures (such as power substations). Losses to movable assets consist of economic
losses due to damaged or destroyed contents of buildings and other private property. Public sector
economic costs accrue because of loss of revenues and increases in expenses for the public sector.
Further, economical losses broadly categorized into direct economical loss and indirect economical loss.
The first two impacts, i.e., losses to immovable assets and losses to movable assets are considered as
direct loss and the rest three impacts, i.e., economic losses due to business interruption, public sector
economic cost and household income losses are considered as indirect economic loss.

A natural disaster like an earthquake has an impact on the Government’s revenues. Income
loss in the affected region can lead to a slump in sales and hence, loss of revenue from sales tax, the major
source of tax revenue of the Government. But, apart from this direct effect, the total impact on revenues
depends on how soon the recovery starts as well as the policy stance of the government. A natural
disaster is followed by recovery and reconstruction. While income loss in the region because of the direct
impact of the earthquake can lead to a loss of revenues in the short run, the construction boom following
the disaster can be a source of additional inflows.

The amount of property loss from a natural disaster depends critically on the development stage
of the affected country. To make comparisons across time and space, researchers measure the size of
loss relative to the size of the economy (more specifically, as percentage of GDP), rather than the
absolute amount in the local currency. It is evident that GDP often drops following a natural disaster, but
the size of the loss critically depends on the developmental stage of the economy. In cases of Latur
earthquake (1993), Bhuj earthquake(2001), Sikkim earthquake(2011) the loss percentage are 0.13% ,
1.00% and 0.13% of GDP of India respectively. Here GDP of India from year 1991 to 2015 is shown in
graph.

3000
GDP of India
GDP (billion USD)

2000

1000
GDP of India
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
YEAR

Figure 1: GDP OF INDIA, (1991-2015)

A detailed study of all 7103 damaging earthquakes from 1 January 1900 to 17 April 2012 in all
over the world has been undertaken by examining the original sources, descriptions and expert opinion
where exact dollar amount losses with regard to disaggregation have been calculated. The results in Fig. 2
are depicted for direct losses and total economic losses by earthquakes. Around 70% of direct economic
losses have come from direct earthquake effects, whereas 30% have occurred due to secondary effects of
earthquakes. For total economic losses, taking into account the indirect losses, this percentage increases
to 38%. This has many implications for our earthquake research. The focus on just shaking losses
should be changed to one of holistic strategies for shaking and secondary effects losses.

Direct economic loss Total Economical loss

3% shaking shaking
6%
2% 13%
4% 14% Tsunami 4% Tsunami
8% Landslide 5% Landslide
69% 62%
liquefaction liquefaction
10%
fire fire
Others Other

Figure 2 : Disaggregation of Shaking and Secondary Effects Economic losses from 7103 earthquakes from 1900 to 2012 - Left:
Direct Economic Losses; Right: Total Economic Losses (After Daniell, E. James., “The CATDAT Damaging
Earthquakes Database”, Australian Earthquake Engineering Society 2010 Conference, Perth, Western
Australia, )
 Sectoral analysis of historical earthquake economic losses reveals that residential losses are not
always the greatest loss sector with respect to earthquakes. 61 major earthquakes between 1907 and 2012
around the world were split into direct earthquake losses into the various social (buildings private, health,
educational etc.), infrastructure (bridges, Pipelines etc.), production and cross-sectoral (banking etc.)
losses. This is evident vividly in the case studies of three earthquakes i.e. Latur earthquake (1993), Bhuj
earthquake (2001), Sikkim earthquake (2011) in the following paragraphs.

THE CASE OF THE 1993 LATUR EARTHQUAKE

A series of earthquakes of magnitude of about of 6.4 on the Richter scale struck the southeastern region of
Maharashtra at 3.56 AM on September 30, 1993. The epicenter was near the village of Killari located in
the Latur district, about 300 miles south east of Mumbai.
The State:
Maharashtra is the third largest state both in terms of land area (309,000 square kilometers) and
population (79,000,000). It is India's most heavily industrialized state with the highest percentage (35.7%)
of state revenues contributed by the industrial sector and a relatively low percentage coming from the
agricultural sector.
Topography:
Latur is situated 636 m above mean sea level, on the Balaghat plateau, on the Maharashtra-Karnataka
state boundary. This area of Maharashtra has extremely hot weather and an acute water scarcity.
Soil Conditions:
Although the region is arid with summer temperatures of 45 degrees Centigrade, the soil is fertile and
productive. These fertile lands adjacent to the rivers are comprised of expansive clayey soils (black cotton
soil) up to seven feet thick in places.
Vernacular building technology:
In vernacular building technology of Marathawada, the stone masonry has been the preferred medium of
wall construction due to availability of basalt stones. The roofs consist of a thick layer of soil laid on a
timber platform.
The Earthquake:
This was a rare intraplate earthquake in the centre of the sub-Indian continent on the Deccan Plateau.
There is no historic record of earthquakes in the area and it is possible that this event may have been
induced by the nearby Lower Tirna Reservoir, although the depth of its waters is on the lower bound of
water depths of reservoirs where induced seismicity has been documented.
The devastating effects of the earthquake were largely due to a vulnerable housing stock, the
shallow focus of the earthquake, which caused widespread damage, the time of the event (early morning
when many people were asleep in vulnerable structures), and the density of the population in the area.
Based on historical records, Marathwada was considered an area of low seismicity; therefore no special
seismic design provisions were required for residential buildings.
Damage:
The earthquake severely affected 67 villages in the districts of Latur and Osmanabad where about 8,000
people were killed and 16,000 were injured. Considerable damage also took place in 11 other districts
including Satara. In total, approximately 225,000 houses were destroyed or damaged, and more than
58,000 families were left homeless. The total loss of public and private property was estimated 364
million USD.
 EFFECTED BUILDINGS
6% No. of dwellings destroyed by shaking
11% No. of non-dwellings destroyed by shaking
1% No. of dwellings damaged by shaking
No. of non-dwellings damaged by shaking

82%

Figure 3: LOSS - BUILDING DAMAGE

Earthquake rehabilitation project:

Soon after the earthquake, the Government of Maharashtra launched a massive rehabilitation project to
cover the entire earthquake-affected area. The reconstruction project was officially titled the Maharashtra
Emergency Rehabilitation Project (MERP). This was one of the largest rebuilding projects in the world
with objectives of enhancing the earthquake resistance of buildings, and reinforcing the capability of the
government to respond more efficiently to possible future disasters.

Table 1. Major Components of the MERP

Component Description
Housing Relocation of 52 villages (27,000 houses)
Reconstruction/repair and retrofitting in situ of 200,000 housing units in over 2,400 villages (RRSP)
Reconstruction/repair and retrofitting of:
• Bridges, culverts and roads,
Infrastructure • Irrigation structures and minor dams,
• Civic amenities, public buildings and schools, and
• Historic monuments.
Development of regional water supply schemes to serve the affected villages, repairs of
damaged bore wells
Provision for special facilities and activities to address the needs of women and children affected by the
Social earthquake, and marginal improvement of facilities throughout the affected area, such as:
• Reconstruction and new development of hostels, ashram schools, old people homes, community centers,
rehabilitation
kindergartens, shelters for destitute women and female children, orphans and the handicapped;
• Strengthening of industrial training institutions, setting up village development funds that would provide
opportunities for self-help income generating activities for women affected by the earthquake.
economic Provision for replacement and reconstruction, on a grant basis, of business losses; this includes
rehabilitation replacement of lost farm implements, minor equipment, bullocks, milk cattle, sheep and goats,
repair/reconstruction of dug irrigation wells, and rehabilitation of artisans and small businesses.

community Costs of works and materials borne by the GOM when establishing the essential services in the transit
housing (temporary shelter) areas in the post-earthquake recovery phase, including: (i) the replacement of
rehabilitation
medicine stocks for human and veterinary services, (ii) the construction of transit shelters, and (iii) the
provision of services for the transit housing areas.
Disaster The preparation of a comprehensive disaster management program for the state, including the development
Management of an earthquake hazard map for Maharashtra and a comprehensive approach at the state and district levels
that included risk and vulnerability assessments, response planning, the development of mitigation
Plan strategies, the acquisition of a satellite based communication system and the development of a GIS-based
Disaster information system.
 REHABILITATION PROGRAM COST (million USD )
8.23 28.21
3% 8% Housing
Infrastructure
3.68
social rehabiliation
1% 220.33
63% economic rehabiliation
11.09
3% community rehabiliation
Disaster Management Plan
76.71
22%

Figure 4: SECTORAL REHABILITATION COST

THE CASE OF THE 2001 BHUJ EARTHQUAKE

On January 26, 2001, at approximately 8:46 a.m. local time, an earthquake occurred in western India
measuring 6.9 on the Richter scale. While the earthquake was felt as far away as Nepal and in
neighboring Pakistan, it’s most severe destruction was unleashed in the state of Gujarat. The earthquake
caused substantial loss of life, injury and damage to private property and infrastructure.
The State:
Gujarat is the 6th largest state in terms of land area (196,204 km2) with a coastline of 1,600 km, most of
which lies on the Kathiawar peninsula, and a population in excess of 60 million.
Gujarat is one of the India’s most industrialized state and the highest-scoring among all States of India on
matters of social capital as per Legatum Institute’s Global Prosperity Index 2012. The State ranks 15th in
a list of 142 nations worldwide and actually ranks higher than several developed nations. The state
maintains a variety of industries, the principal ones being general and electrical engineering and the
manufacture of textiles, vegetable oils, chemicals, soda ash, and cement.
Topography:
In terms of topography, Gujarat shows a wide variation. The topography of Gujarat is divided into 3
major regions, namely: (i)The Peninsular - the region, which is also known as Saurashtra, is essentially a
hilly tract. (ii) The Kutch - It is a barren and rocky area containing the great Rann. The Rann is further
Kutch and the Aravalli hills to the river Damanganga.
The earthquake:
The 2001 Gujarat earthquake occurred on 26 January, India’s 52 nd Republic Day, at 08:46 AM IST and
lasted over 2 minutes. The epicenter was about 9 km south-southwest of the village of Chobri in Bhachau
Taluka of Kutch District. The earthquake killed around 20,000 people, injured another 167,000 and
destroyed nearly 400,000 homes.
Damage:
The scale of physical destruction was also immense: 1.2 million homes, 2,000 health facilities, 12,000
schools, hundreds of public and other buildings (including thousands of records), dams, water supply
systems, roads, power and telecommunications systems, factories, cottage industries and farms were all
destroyed or damaged, effectively crippling the state’s social, public, and municipal services as well as its
economy. The earthquake affected 12 districts but Kutchh, one of the poorest districts in the state, was
most seriously affected with an average of 70% of all buildings destroyed.
Economical impact:
The total loss of public and private property was estimated 4.97 billion USD according to World Bank
and the percentage loss in terms of GDP was 1% of GDP of India. The earthquake adversely affected
medium- and small-scale industries in the quake affected region on large scale, and that had resulted in
loss of employment for thousands of people (around 488 thousand persons).
As previously stated that the quake also affects the revenue of the state, revenue loss in April 2011 was
estimated as 40 per cent of the expected revenue for the entire state except the Bhuj circle. For Bhuj, the
revenue loss was taken to be 80 per cent for the whole of 2001-2002.
Impact on the labour wages:
In India about 56% of the workforce is indulged in building industry alone. After the earthquake it had
been increased by 26%, because of the requirement for repairs and renovation of the affected buildings
and structures for a certain period of time. Increased employment for unskilled workers was largely
observed during the first 18 months just after the earthquake occurrence. It resulted in an increase in their
monthly income by 20% on an average. Daily income of labors in building industry has been graphically
presented in fig as bar chart.

400
Income in Rupees

300

200 Labour

100 Mason

0 Carpenter
2000 2001 2002 2003
Year

Figure 5: Trend of labour wages in Bhuj(After Lahiri, Ashok K., Sen, Tapas K., Rao, Kavita R., Jena, Pratap R.,
“Economic Consequences of the Gujarat Earthquake” )

Earthquake Rehabilitation program:

Rehabilitation and reconstruction program in the earthquake affected areas including restoration of
houses, public buildings and basic infrastructure in the roads and irrigation sectors is detailed in table 2.

Table 2. Sectoral Reconstruction

House Reconstructed 125781

Houses Repaired 41751
Public building reconstructed 232
Public building retrofitted 2848
Dams rehabilitation 225
Roads Improved 870 km
 REHABILITATION PROGRAM COST (million USD)
6
1% Reconstruction of public
73.5 infrastructure
16% Repair & Reconstruction of
245 permanent housing
4 53% Community Participation
1%
135 Disaster management
29%

transport Gvt. Buildings

4% 2% Monuments
Housing 4%
Health
50% Education 3%
8%

Other Irrigation
12% 7%
water supply
Power Scheme
Ports
5% 4%
1%

Figure 6: Rehabilitation cost, Sector wise.

THE CASE OF THE 2011 SIKKIM EARTHQUAKE

The M6.9 earthquake hit Sikkim on 18th September 2011 with its epicenter located at 27.72°N, 88.06°E,
near India-Nepal border, about 68 km NW of Gangtok and at a focal depth of 19.7 km as reported by
USGS. Maximum observed shaking intensity during this earthquake was VIII on MSK scale. About 100
deaths are reported in India with the maximum of at least 60 in the state of Sikkim and total loss of
property was about 2.26 billion USD.
The State:
Sikkim is a small state in northwest India, bordered by Bhutan, Tibet and Nepal. Part of the Himalayas,
the area has a dramatic landscape including India’s highest mountain, 8,586m Kanchenjunga. Sikkim is
also home to glaciers, alpine meadows and thousands of varieties of wildflowers. Steep paths lead to
hilltop Buddhist monasteries such as Pemayangtse, which dates to the early 1700s.
It is bounded by vast stretches of the Tibetan Plateau in the north, the Chumbi valley of Tibet and the
Kingdom of Bhutan in the east, the Kingdom of Nepal in the west and the Darjeeling district of West
Bengal in the south. Areas falling under Zone-IV witness frequent low intensity shallow focus micro-
earthquakes. In fact, the State lies on an earthquake fault line. The Indian tectonic plane here is gradually
pushing up the Eurasian plane for last many years. This tectonic movement can cause earthquakes of even
larger intensity in future.
Topography:
Sikkim has very complex topography. It has 28 mountain peaks, more than 80 glaciers, 27 high altitude
lakes, five major hot springs and more than 100 rivers and streams. The State has not only been endowed
with a peculiar topography but it is ecologically sensitive and prone to earthquakes. It has fragile ecology
being the steepest and the highest State in the country, and the third highest landscape on the globe. It is a
mountainous State crisscrossed by narrow valleys and steep cliffs. The young fold mountains are
characterized by a weak geology, comprising sedimentary and low grade metamorphic rocks which are
susceptible to weathering and erosion.
It is worthwhile to mention here that Sikkim and adjoining regions are known to be part of the
seismically active region of the ‘Alpine-Himalayan global seismic belt’, with four great earthquakes of
the world of magnitude 8.0 and above occurring in this region.
Past history of the seismicity of the region:

S.No. Earthquake Date Magnitude

1 Cachar earthquake 10.01.1869 M: 7.5
2 Shillong plateau earthquake 12.06.1897 M: 8.7
3 Dhubri earthquake 02.07.1930 M: 7.1
4 Bihar-Nepal Border earthquake 15.01.1934 M: 8.3
5 Arunachal Pradesh-China border earthquake 15.08.1950 M: 8.5
6 Nepal- India Border earthquake 21.08.1988 M:6.4
7 Sikkim earthquake 14.02.2006 M: 5.7
8 Bhutan earthquake 21.09.2009 M: 6.2

Vernacular Building Technology:

Shee-khim and Ikra are vernacular building technology of Sikkim. Shee-Khim practiced in upper
reaches of Sikkim. It is made of wooden frame and planks and supported on wooden posts. Houses are
provided with random-rubble (R/R) masonry wall as basement enclosure.
Another type of traditional housing practice in Sikkim is Ikra house. Walls are made up of bamboo panels
fitted inside the wooden frames and plastered with cement/mud mortar. These are supported on wooden
posts.

Figure 7. Shi-Kheem House Figure 8. Ikra House

The Earthquake:
As previously mentioned, the earthquake caused severe damages to life and property throughout the State.
The high density tremor triggered other natural calamities in the form of landslides, road blocks, falling
boulders, lake bursts, flash floods etc. After the tremor, incessant heavy rain also continued for more than
a week. This caused extensive damage to human life, property and infrastructure
Losses and Damages:
Human life: 63 human lives lost. Many people lost their limbs and eyes, 597 people were injured and
hospitalized with grievous injuries.
Social infrastructure: Total schools damaged: 759 nos., Hospitals / PHCs damaged: 377 nos.; ICDS
(Anganwadi) damaged: 875 nos.; Other Government Buildings damaged: 1255 nos.
Transportation infrastructure: Total Roads damaged: 3230 km; Village footpaths (cement concrete)
damaged: 1596 nos.; Bridges / Culverts damaged: 8135 nos.
Energy infrastructure: Power infrastructure: Major damage to generation plants, electrical grid,
substations, transformers and local distribution network
Water management infrastructure: Water supply schemes damaged: 1529 nos.; Minor Irrigation works
damaged: 204 nos.; Flood Control Management works damaged: 533 nos.
Community infrastructure: Gram Panchayats offices damaged: 60 nos.; Community toilets damaged: 155
nos. ; Village level cooperatives (MPCS) damaged: 49 nos. Rural Product Marketing Centers (RPMC)
damaged: 8 nos.
Cultural heritage institutions: Damage to 259 nos. of religious institutions, monuments and various
heritage monasteries, temples and churches. Along with this valuable artifacts have also been destroyed
which also included historic manuscripts.

Earthquake rehabilitation program:

Rehabilitation and reconstruction program cost in the earthquake affected areas including restoration of
houses, public buildings and basic infrastructure in the roads and irrigation sectors has been shown in pi-
chart as following.

Rehabilitation program
Roads and Bridges
govermental infra.
Building & Housing
7% Religious Institutions
14% 36%
5% Drnking water supply works
Irrigation
14% Power
7% 5% 10% Education
Others

2%

Figure 9: Earthquake rehabilitation program, sectoral cost percentage

Comparative Details of Latur (1993), Bhuj (2001), Sikkim (2011) Earthquakes

Table 3. COMPARISON OF SEVERITY

S.No Event Date Mag Population of % % loss

GDP of
. nitud state Absolute Contrib of
India
e Densit Deaths Injured Loss(millio ution of GDP
(In (billion
y(per n USD) state in of
million) USD)
sq.km) NGDP* India
1 Latur(1993) 30/09/1993 6.4 79 256 8000 16000 364 284.2 16.5 0.128
2 Bhuj(2001) 26/01/2001 6.9 49 249 20000 167000 4970 494 8.1 1.00
3 Sikkim(2011) 18/07/2011 6.9 0.6 86 63 597 2260 1708.5 0.08 0.132
*NGDP- NATIONAL GROSS DOMESTIC PRODUCT
Among three earthquakes of Latur (1993), Bhuj(2001), Sikkim(2011) , Bhuj has the highest percentage
loss which is 1% of total GDP of India. Given that Gujarat accounts for only about 7 percent of the GDP
of India the impact of the quake on the GDP of the country was insignificant and that can be analysed in
figure 1. The same thing is valid for other two earthquakes with 0.128% loss of NGDP for Latur
earthquake and 0.132% loss of NGDP for Sikkim earthquake.
While the impact of the earthquake on India’s gross domestic product is insignificant, but absolute loss
was very high and, in the areas where it struck, the earthquake devastated lives, social infrastructure, and
economic foundations.
70
60
50
40
% Cost

1993
30
2001
20
10 2011
0
Housing &Roads & Irrigation Water Gvt Power Education
Building Bridges Supply Building
Figure 10: Sectoral % Cost of Rehabilitation program of 1993, 2001 & 2011 Earthquakes

With time the percentage of indirect economic rehabilitation cost is increasing with respect to direct
economic cost. And it can be analysed with the help of bar chart of figure 10. In last three decade the %
cost of Hosing & Building sector has decreased and there is an evident increment can be seen in sectors
like irrigation, Water supply, power and education. Here it is worthwhile to mention that in Sikkim
earthquake the sector of roads & bridges has the heaviest weightage among other sectors due to the rough
terrain and complex topography of the state.

CONCLUSION

The damage is primarily attributed to poor design and construction practices and lack of quality control.
Poor construction practices prevalent in the area spell tremendous risk for the population of this region.
While absolute economic losses are very high for the mentioned earthquakes, but their percent loss in
terms of GDP of India is insignificant. It has been found the increment in the percent loss of indirect
economic loss.
The solution lies in opting for safer construction through choice of appropriate construction systems in
corporation with earthquake resistant technology, use of good construction materials and their quality
control, and involvement of competent manpower for design construction and supervision.

REFERENCES

1. Daniell ,J.E., Vervaeck ,A., “ The worldwide economic impact of historic earthquakes”; 15WCEE LISBOA
2012, page 6-7.
2. Daniell, E. James., “The CATDAT Damaging Earthquakes Database”, Australian Earthquake Engineering
Society 2010 Conference, Perth, Western Australia,
3. Document of The World Bank, “Maharashtra Emergency Earthquake Rehabilitation Project”, Report No. 19218
4. Majorie, G., Chandra, Krimgold, F., Pantelic, J., “Overview of the Maharashtra, India Emergency Earthquake
Rehabilitation Program”, 12WCEE 2000.
5. Gokhale, Vasudha A., Joshi, R Deepa., Abhayankar, A.L., “The Psychological And Socio Economic Aspects Of
Earthquake Occurrence”, 13 WCEE, CANADA 2004.
6. Lahiri, Ashok K., Sen, Tapas K., Rao, Kavita R., Jena, Pratap R., “Economic Consequences of the Gujarat
Earthquake”, pages:9-12.
7. Gujarat Earthquake Recovery Program, Assessment Report by the World Bank and the Asian Development
Bank, March, 2001. Page: 11-13.
8. Government of Sikkim, Land Revenue and Disaster Management Department “White Paper on The High
Intensity Earthquake 18th September 2011 in Sikkim”, December 2012
9. Rai, C. Durgesh, Mondal Goutam, Singha ,Vaibhav; Tripti Pradhan, “2011 Sikkim Earthquake Effects on Built
Environment & Perspective on Growing Seismic Risk”, National Information Center on Earthquake Engineering.