Summary of Economic Impact Analyses and 

Policy Implications of the HayWired Scenario

By Stephen Levy, Anne M. Wein, and Cynthia Kroll

Chapter V1 of

The HayWired Earthquake Scenario—Societal Consequences

Edited by Shane T. Detweiler and Anne M. Wein

Scientific Investigations Report 2017–5013–R–W

U.S. Department of the Interior

U.S. Geological Survey
U.S. Department of the Interior

DAVID BERNHARDT, Secretary

U.S. Geological Survey

James F. Reilly II, Director

U.S. Geological Survey, Reston, Virginia: 2020

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Suggested citation:

Levy, S., Wein, A.M., and Kroll, C., 2020, Summary of economic impact analyses and policy implications of the HayWired 

scenario, chap. V1 of Detweiler, S.T., and Wein, A.M., eds., The HayWired earthquake scenario—Societal consequences: 

U.S. Geological Survey Scientific Investigations Report 2017–5013–R–W, 22 p., https://doi.org/10.3133/sir20175013v3.

ISSN 2328-0328 (online)
iii

Contents

Introduction.....................................................................................................................................................1

Overview of the HayWired Economic Analysis ........................................................................................1

High-Level Findings from the HayWired Scenario..........................................................................2

Macroeconomic Analyses .........................................................................................................2

Geographic and Business Analyses.........................................................................................3

Insurance Analysis......................................................................................................................3

Human Effects ..............................................................................................................................3

Macroeconomic Impacts and Economic Resilience Analysis—The First 6 Months................4

Longer Term Macroeconomic Analysis—Effects of a Major Earthquake on the Region’s 

Future.........................................................................................................................................5

How Business Characteristics and Location affect Vulnerability and Outcomes.....................9

Geographic Concentrations of Impacts and their Interactions—A Spatial Analysis .............10

Concentrated Building Damages ............................................................................................10

Concentrated Building Damages and Sectors .....................................................................12

Home and Workplace Relations..............................................................................................12

Policy Implications Related to the Economic Analyses ........................................................................15

Planning Ahead...................................................................................................................................15

The Role of Employers........................................................................................................................16

Policies Effective After the Earthquake ..........................................................................................17

The Relation with Housing ................................................................................................................17

The Role of Insurance........................................................................................................................17

Closing Statement........................................................................................................................................18

References Cited..........................................................................................................................................18

Reflections on the COVID-19 Pandemic, June 2020...............................................................................19

Pandemics and Earthquakes are Different Types of Disasters...................................................19

COVID-19 Pandemic Experience Can Inform the HayWired Scenario Analysis......................20

Important Policy Lessons ..................................................................................................................20

Advance Preparedness and Mitigation .................................................................................20

A COVID-19 Recovery Plan Can Spur Earthquake Preparedness .....................................21

A Final Thought....................................................................................................................................21

Acknowledgments..............................................................................................................................21

References Cited.................................................................................................................................21
iv

Figures

1. Line graph showing the percentage of employment difference resulting from the 

HayWired earthquake scenario in the San Francisco Bay region, California....................7

2. Line graph showing the recovery progression for the three most recent recessions for 

the east bay subregion of the San Francisco Bay region, California, compared to job 

projection in the HayWired scenario ........................................................................................7

3. Bar graphs showing San Francisco Bay region, California, employment change 

projections after the HayWired scenario mainshock.............................................................8

4. Line graph showing population curves in the HayWired scenario for the San Francisco 

Bay region, California, relative to the Association of Bay Area Governments regional and 

statewide projections.....................................................................................................................9

5. Plot showing business characteristics with average and larger risk of disruptive 

building damage from earthquake hazards in the HayWired scenario in the San 

Francisco Bay region, California..............................................................................................10

6. Map of the San Francisco Bay region, California, showing census tracts with 

concentrated damage in subareas as a result of hazards caused by the HayWired 

scenario mainshock on the Hayward Fault............................................................................11

7. Cartoon showing possible home-workplace relations associated with areas of 

concentrated and less-concentrated damage resulting from the HayWired scenario 

mainshock in the San Francisco Bay region, California ......................................................13

8. Map showing employed resident flow out of areas of concentrated damage resulting 

from the HayWired scenario mainshock for the central Alameda County subarea, 

California ......................................................................................................................................14

Tables

1. Analyses of economic outcomes of the HayWired scenario................................................2

2. Summary of data and voice telecommunications disruptions resulting from the 

HayWired earthquake scenario for the base case and resilience cases...........................5

3. Total Gross Domestic Product changes without and with all resilience measures in the 

6 months after the HayWired earthquake scenario in the San Francisco Bay region and 

California.......................................................................................................................................................... 5

4. Total employment difference from all effects of the HayWired scenario mainshock 

relative to the undisrupted Association of Bay Area Governments’ 2017 projection for 

the San Francisco Bay region, California .................................................................................6
The HayWired Earthquake Scenario—Societal Consequences

 Edited by Shane T. Detweiler and Anne M. Wein

Scientific Investigations Report 2017–5013–R–W 

[Also see https://doi.org/10.3133/sir20175013v3]

Summary of Economic Impact Analyses and Policy 

Implications of the HayWired Scenario

Chapter V1

By Stephen Levy1, Anne M. Wein2, and Cynthia Kroll3

Introduction

The HayWired scenario examines a hypothetical earthquake 

sequence with a moment magnitude (Mw) 7.0 mainshock 

occurring on April 18, 2018, at 4:18 p.m. on the Hayward Fault 

in the east bay part of California’s San Francisco Bay region. 

Economic and community impact analyses for the HayWired 

earthquake scenario paint a bleak picture of the consequences of 

an earthquake centered in Alameda County and affecting much of 

the nine-county San Francisco Bay region, which is home to about 

7.8 million people. In this scenario, hundreds of thousands of San 

Francisco Bay region residents are affected by disruption to their 

families, homes, and jobs, raising questions:

• Is the San Francisco Bay region economy strong

enough to withstand an event of this magnitude?

• Would the region’s economy recover? How quickly?

• What are the key factors in determining how resilient

the economy would be?

• Where are businesses and the people living or working

in the region affected?

This subchapter summarizes a series of technical 

subchapters that look at the level of economic impact that 

could be expected from the HayWired earthquake scenario, 

how that impact would be distributed among geographic areas 

and types of businesses in the region, and how individual 

and policy decisions made before or applied after the event 

can change the overall impact immediately and over time. 

The economic analyses convey that whereas the overall 

economic losses can be overcome at a regional scale, policy 

interventions can be most important for addressing human 

challenges and location-specific challenges.

Overview of the HayWired Economic 

Analysis

The HayWired scenario is a collaborative effort led by the 

U.S. Geological Survey. Five studies were commissioned to 

identify the economic impacts and related policy implications of 

the HayWired earthquake scenario (see table 1). The full technical 

subchapters are published separately in this volume. Two studies 

focused on macroeconomic impacts—impacts on the levels of 

output, employment, and associated population movements in 

the San Francisco Bay region after the earthquake. Two studies 

focused on impacts for industry groups, business types by size 

and ownership, small geographic areas, and employee workplaces 

and homes. The final study, commissioned to inform both the 

economic analyses and the communities-at-risk analysis, focused 

on insurance coverage and related policy issues. The aim of these 

efforts is to inform policies, mitigation approaches, and programs 

that could be helpful in the San Francisco Bay region before and 

after a large earthquake like that in the HayWired scenario.

The assessments of economic impact were derived from 

estimates of physical damage to structures and infrastructure, such 

as transportation and telecommunication networks. Output and 

employment losses are the result of business interruptions caused 

by business and residential damages, transportation (highway and 

mass transit) disruptions, and telecommunications, water, and 

electric power outages.

Damaged homes, businesses, public facilities, utilities, and 

transportation and telecommunications infrastructure would 

need to be rebuilt and the speed of rebuilding would affect the 

amount and duration of economic losses. Temporary housing, 

business relocation, and restoration of services can help to 

reduce these losses.

Impacts can be important for policy purposes either because 

they are large or because they fall on individuals and organizations 

with limited ability to respond. For example, small businesses are 

slightly more likely to be disrupted by building damages compared 

to very large businesses in the HayWired scenario. Of greater 

significance, small businesses are also less able to prepare for 

and respond to a large earthquake compared to larger firms and 

organizations with multiple locations.

1

Center for Continuing Study of the California Economy.

2

U.S. Geological Survey.

3

Metropolitan Transportation Commission and Association of Bay Area 

Governments, retired.
2 The HayWired Earthquake Scenario—Societal Consequences

Table 1. Analyses of economic outcomes of the HayWired scenario.

[ABAG, Association of Bay Area Governments; MTC, San Francisco Bay Area Metropolitan Transportation Commission; USC, University of Southern California; 

USGS, U.S. Geological Survey]

Study title Authors and affiliations Method Commissioner Location in 

HayWired volume 3

Economic consequences of 

the HayWired earthquake 

scenario—Cyber and 

electricity network linkages 

and resilience

Ian Sue Wing (Boston University), 

Dan Wei and Adam Rose (USC), 

and Anne Wein (USGS)

Macroeconomic model of Gross 

Domestic Product losses in 

San Francisco Bay counties, 

the region, and the State of 

California during the first 6 

months

HayWired 

project

Subchapter V2

The economic effects of the 

HayWired scenario using 

the Association of Bay 

Area Governments regional 

growth forecast

Cynthia Kroll, Bobby Lu, and 

Aksel Olsen (MTC and ABAG), 

and Anne Wein (USGS) 

Macroeconomic model of Gross 

Regional Product, job, and 

population losses in subregions 

and the nine-county region 

compared to growth forecast 

over the next two decades

HayWired 

project

Subchapter V3

Characteristics of businesses 

disrupted by building 

damages from the 

HayWired scenario 

mainshock

Anne Wein (USGS), Jon Haveman 

(Marin Economic Consulting), 

Cynthia Kroll (MTC and 

ABAG), and Jeff Peters (USGS)

Spatial analysis of business 

exposure to building damage 

throughout the region by 

business characteristics 

HayWired 

project 

Subchapter V4

Spatial analysis of industries, 

employment, and 

commute flows in areas of 

concentrated damage from 

the HayWired earthquake 

scenario

Anne Wein (USGS), Dena 

Belzer (Strategic Economics), 

Cynthia Kroll (MTC and 

ABAG), Carline Au (Strategic 

Economics), Jamie Jones 

(USGS), Laurie Johnson (Laurie 

Johnson Consulting), Aksel 

Olsen (MTC and ABAG), and 

Jeff Peters (USGS)

Subarea and industrial sector 

exposures to concentrated 

damage and work-home 

relations between these areas in 

the region

HayWired 

project

Subchapter V5

Financial implications of the 

HayWired scenario

CoreLogic, Inc. Insurance models of damage and 

coverage

California 

Earthquake 

Authority

Discussed in chapter 

U; published 

separately by 

CoreLogic, Inc. 

(2018)

There is a time dimension to these findings. Some 

impacts are large and short lived. Other impacts may last for 

many months or years. Recovery would vary across different 

types of businesses and residents and geographic parts of the 

region. Recovery would also depend on the scope of insurance 

coverage and the ability of the public and private sectors to 

raise funds for rebuilding.

In addition to identifying and quantifying economic 

impacts, the goal of this research is to identify policy 

responses that can prevent damage, reduce some of the 

impacts, and facilitate the recovery process. These involve 

forward-looking community and regional planning, actions 

that can be taken beforehand, such as retrofitting buildings 

and new building designs, and policies that speed up recovery, 

such as business continuity and preparation, adequate 

insurance, and other reconstruction funding mechanisms.

This report is organized as follows: (1) an overview of highlevel findings, (2) a summary of each individual report, (3) a list of 

the major policy implications, and (4) a closing statement.

High-Level Findings from the HayWired Scenario

This section identifies and summarizes the high-level 

findings of the four HayWired scenario economic analyses. These 

findings also include relevant insurance analysis findings. 

Macroeconomic Analyses

• Damages to hundreds of thousands of vulnerable 

buildings (residential, commercial, and industrial) and 

months to years of disrupted transportation systems 
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 3

(for example, major highways and transit) result in job 

and production (output) losses similar to a moderate to 

severe recession.

• Job and output losses are concentrated in the areas of 

strongest shaking and liquefaction in Alameda and Contra 

Costa Counties.

• The cumulative output loss effects from transportation 

network and commuting flow interruptions could 

spread economic losses throughout the San Francisco 

Bay region and be as large as the output loss associated 

with building damage.

• Most of the economic losses occur within the first 6 

months to one year after the Mw 7.0 earthquake of the 

HayWired scenario, although the losses continue for 

a few years beyond, and it takes many more years to 

rebuild damaged buildings and infrastructure.

• Bottlenecks from labor, material, and funding shortages 

and higher construction costs could stretch recovery 

times for several additional years. Such delays were 

found in Santa Rosa and Sonoma County after 

extensive wildfire damage to homes in 2017 (Li, 2018).

• The amount of economic losses and the time 

for recovery and rebuilding can be reduced by 

implementing mitigation and resilience measures such 

as those discussed in the policy implications section.

Geographic and Business Analyses

• Risk of building damage that limits or restricts building 

use varies greatly depending on location, with the 

largest impacts in central Alameda County and parts of 

Contra Costa County.

• In addition to business location, the type of building 

an industry tends to occupy affects its risk of building 

damage. For example, production and distribution 

industries are more concentrated in older buildings 

with less modern reinforcement and seismic safety 

design, and thus face higher risk of building damage.

• Beyond individual building damage risks, concentrated 

building damage (defined as more than 20 percent of 

building square footage extensively or completely 

damaged within neighborhoods or business districts) 

complicates response and recovery in these areas. 

Concentrated building damage in more than 10 percent 

of San Francisco Bay region census tracts is largely 

attributable to damages to (likely older) industrial/

warehouse, retail/commercial, and multifamily 

residential buildings.

• Almost 200,000 employees (7.6 percent of jobs in the 

nine-county region) may work in damaged buildings 

with limited or restricted use, but the lives of more 

than 500,000 employees (14 percent) are potentially 

affected by concentrated damage in their business 

districts or residential neighborhoods, even if their 

work or homes are undamaged.

Insurance Analysis

• About 95 percent of homeowners have basic (including 

fire) residential property insurance coverage, but 

only about 10 percent of general residential property 

insurance holders in the nine-county region have an 

earthquake insurance policy.

• Statewide, only 8.5 percent of insured commercial 

properties have earthquake insurance coverage. Large 

commercial properties are insured, raising the overall 

share of square footage covered by insurance, such that 

smaller and less-resourced businesses are less likely 

to have property insurance and more likely to face 

shortfalls in recovery financing.

• CoreLogic, Inc., estimates $170 billion in damages for 

the HayWired earthquake scenario, of which $30.2 

billion are insured. About 18 percent of the total 

damage estimate is insured—9 percent of estimated 

residential damage and 20 percent of estimated 

commercial damage. Of the insured damages,

• About $21.2 billion are for the Mw 7.0 earthquake 

damages from ground shaking, liquefaction, and 

landslide;

• $4 billion are for fire and sprinkler damage; and

• $5 billion are for aftershock damages.

• These estimates do not include the insured losses for 

damage to the region’s infrastructure and government 

buildings (which may be covered by self-insurance 

funds set aside by jurisdictions), workers compensation 

exposures, automobile lines of business, and indirect 

business interruption of such a major disaster.

Human Considerations

• Whereas economic losses are comparable to the effects of 

the first few years of a recession, the human challenges 

(emotional trauma, population displacement, and job 

losses) to many residents and businesses would be severe 

and the degree of severity would depend on preparation 

and post-earthquake actions.
4 The HayWired Earthquake Scenario—Societal Consequences

The San Francisco Bay Region Economy

The nine-county San Francisco Bay region accounts for a 

growing share of the U.S. economy, reaching almost 3 percent 

of the Nation’s jobs and almost 4 percent of the Nation’s output 

in 2017. The region has close to 4 million wage and salary jobs, 

of which 30 percent are in the east bay, where the HayWired 

scenario damages are concentrated. The region is home to 

Silicon Valley, which has seen several waves of industry 

innovation and expansion in high tech, multimedia, and social 

media over the past four decades, and the city of San Francisco, 

once the financial center of the west coast, is now a hub for 

high-tech services and social media and has played a key 

role in incubating new companies over the past two decades. 

Alameda and Contra Costa Counties, the two east bay counties, 

provide somewhat more affordable housing for many of the 

workers who commute to San Francisco and the south bay. One 

strength of the east bay economy has been its diversity, with 

some spillover of jobs from Silicon Valley and San Francisco, 

but also a concentration of regional and local serving and 

support services for residents and businesses. Oakland, the 

region’s third largest city, is in the heart of the east bay and is 

a Federal job center for the region; the east bay also has a high 

concentration of trade and construction jobs. The San Francisco 

Bay region has a multiethnic, multilingual, and mobile 

population—more than 30 percent of the population is foreign 

born. With nine counties and 101 cities, the San Francisco Bay 

region has developed innovative ways to address the seismic 

risks faced daily, but also faces challenges in finding effective 

policies that can be adopted by small and large, rich and poor 

jurisdictions throughout the region.

Macroeconomic Impacts and Economic 

Resilience Analysis—The First 6 Months

The subchapter “Economic Consequences of the 

HayWired Earthquake Scenario” evaluates the economic 

impacts from the HayWired earthquake scenario on the 

economies of the San Francisco Bay region and California 

State using a computable general equilibrium (CGE) 

simulation model. A CGE model is commonly used for 

estimation of business interruption losses measured as 

Gross Domestic Product (GDP). It uses real-world sector 

purchasing data in a system of equations that describe the 

general equilibrium balance of different elements of an 

economy. As such, business interruption losses ripple through 

supply and customer chains.

In the 6-month period after the Mw 7.0 HayWired scenario 

earthquake, total GDP losses are estimated to be $43.2 billion 

(2014 U.S. dollars) for the State of California—that is, 4.2 percent 

of the State’s baseline GDP for that period. The GDP losses are 

primarily caused by property damages; individual GDP losses 

from water, power, or telecommunication outages do not exceed 

$900 million.

However, this loss could be reduced by 42 percent 

to $25.3 billion if economic resilience measures are 

implemented after the damages and outages have occurred. 

Implementation of economic resilience measures after the 

disaster is in contrast to mitigation investments to reduce 

damages before a disaster. Evaluation of these resilience 

measures, which include business continuity planning, is a 

major contribution of this study. The sidebar below provides 

a summary of the types of measures evaluated.

Economic Resilience Measures

1. Resilience measures that speed restoration of 

services. These include:

A. Input substitution, such as fixed back-up

power (batteries and generators) for 

telecommunications equipment and fuel 

management plans for water utilities in case of 

an electric power outage.

B. Inventories of portable telecommunication

equipment to temporarily add capacity in 

telecommunications networks.

2. Resilience measures that work around the supplier 

disruption to maintain production of goods and services. 

These include:

A. Conservation of critical inputs (for example,

recycling water).

B. Input substitution that replaces an unavailable

good or service (for example, using a plain old 

telephone service in place of Voice over Internet 

Protocol service, or vice versa).

C. Resource isolation to allow the proportion of the

production or sales processes that can continue 

without utility services. For example, much of 

agricultural production does not require electricity.

3. Resilience measures that use resources beyond normal 

use to serve more customers. Two examples are:

A. Production recapture (rescheduling) is the ability

of businesses to recoup lost production by working 

overtime or extra shifts once their operational 

capability is restored and their critical inputs and 

employees are available. This is a viable option for 

short-term disruptions, where customers are less 

likely to cancel orders from their standard suppliers.

B. Relocation of businesses, including teleworking

from other locations (for example, shared 

workplaces or homes).
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 5

Table 2 illustrates resilience measures that reduce 

estimated unmet demand for telecommunication services. 

They may include 

• fixed backup power (batteries and generators) to 

substitute for electric power supply disruption in the 

short term,

• user behavior management (including texting instead of 

talking) to temporarily conserve available bandwidth, 

• longer lasting resilience measures when carriers truck 

in portable equipment and fuel to speed restoration. 

For example, in Alameda County, the service disruption in 

the base case results in 5.1 percent unmet customer demand over 

6 months. If the fixed back-up power measure alone is adopted, 

unmet demand drops to 4.4 percent. The table shows the impact of 

each resilience measure separately, but if all measures are adopted, 

unmet demand drops to 0.8 percent in Alameda County. In turn, the 

resilience measures reduce the GDP losses from telecommunication 

service outages from $350 million to $40 million.

Regarding property damages, the most effective resilience 

measure is shown to be catching up on lost production (38 

percent reduction in GDP losses) followed by telework (6 percent 

reduction in GDP losses). Results of the modeling without 

and with resilience are shown in table 3. As shown below, the 

hardest hit county of Alameda has a decline of $12.7 billion 

(or 23.5 percent) with no resilience measures and a decline of 

$7.45 billion (or 13.8 percent) with all resilience measures. Both 

Alameda and Santa Clara Counties suffer from $7 billion GDP 

losses once resilience is incorporated. The study found that the 

overall economic impacts were smaller than the peak national 

percentage of GDP losses in two consecutive quarters of the Great 

Recession that began in 4th quarter of 2007, except for Alameda 

County alone, and smaller than the region’s peak percentage of 

GDP losses, except for Alameda and Santa Clara Counties alone. 

Therefore, the predicted economic impacts of the HayWired 

scenario earthquake would result in a recession in the San 

Francisco Bay region, but not a multiyear global impact like the 

Great Depression of the 1930s.

Longer Term Macroeconomic Analysis—Effects 

of a Major Earthquake on the Region’s Future

The subchapter “The Economic Effects of the HayWired 

Scenario Using the Association of Bay Area Governments 

Regional Growth Forecast” examines how the long-term 

trajectory of the region’s economy could be altered by a major 

earthquake along the Hayward Fault for the nine-county 

San Francisco Bay region. In this analysis, the following 

subregions are defined: 

• the east bay is Alameda and Contra Costa Counties, 

Table 2. Summary of data and voice telecommunications disruptions resulting from the HayWired earthquake scenario for the base 

case and resilience cases on a 6-month basis for the five most disrupted counties in the San Francisco Bay region, California.

[Values are percentages of unmet customer service demand]

County

Base case 

(no resilience 

measures)

Supplier resilience measures Customer resilience measures All 

resilience 

measures

Fixed back-up 

power

Fuel/portable 

equipment

User behavior 

management

Input 

substitution

Production 

and sale 

isolation

Alameda 5.1 4.4 3.0 4.7 2.8 2.1 0.8

Contra Costa 3.6 3.1 1.7 2.8 1.9 1.1 0.3

San Francisco 1.9 1.6 1.5 1.7 1.3 1.0 0.5

San Mateo 2.3 1.9 1.6 2.2 1.4 1.1 0.4

Santa Clara 3.7 3.1 1.7 2.9 2.0 1.4 0.4

Table 3. Total Gross Domestic Product changes without and with all resilience measures in the 6 months after the HayWired 

earthquake scenario in the San Francisco Bay region and California.

[Values in billions of 2012 U.S. dollars. %, percent]

Loss category Alameda 

County

Contra 

Costa 

County

San 

Francisco 

County

San 

Mateo 

County

Santa 

Clara 

County

Rest of San 

Francisco 

Bay region1

Rest of 

California

California 

total

No resilience −12.7 −3.6 −2.5 −3.6 −13.1 −2.1 −6.5 −44.2

−23.5% −11.4% −4.0% −8.4% −11.2% −1.3% −1.0% −4.2%

With resilience −7.45 −2.11 −1.31 −2.02 −7.23 −1.23 −3.94 −25.3

−13.8% −3.4% −2.1% −4.6% −6.2% −0.8% −0.6% −2.4%

1

Marin, Napa, Sonoma, and Solano Counties.
6 The HayWired Earthquake Scenario—Societal Consequences

• the north bay is Napa, Solano, and Sonoma Counties,

• the west bay is Marin, San Francisco, and San Mateo 

Counties, and

• the south bay is Santa Clara County. 

The Association of Bay Area Governments (ABAG) and 

Metropolitan Transportation Commission analysis, using the 

Regional Economic Models, Inc. (REMI) model, translates 

sector output losses from building damage, commute flow 

interruption, and other factors into disruptions in business 

activity and then into estimates of the impact on the 2017 

ABAG projection of jobs, regional output, and population. 

The analysis also considers sensitivities of effects to varying 

recovery times for trade and manufacturing sectors, housing 

cost increases, and population responses in terms of migration. 

Government disaster funds and insurance payouts counteract 

some of these effects.

The economic impacts are primarily caused by output 

losses from building damages and commute flow interruptions 

from transportation (Bay Area Rapid Transit [BART] and 

highways) disruptions that may last months to a few years. 

The analysis shows an economy that would experience 

substantial damages and losses in the short term. In the 

first year after the earthquake, assumed to occur in 2018, 

employment would drop by approximately half a million 

jobs (table 4) and Gross Regional Product would decline by 8 

percent relative to the growth projected in 2017. The decline 

in output from commute flow interruption more than doubles 

the employment and population loss. Although building 

damage is the major contributor to employment loss from 

building damage in the east bay, where damage is greatest, 

commute flow interruptions in the west and south bay affect 

employment to a much greater degree than employment loss 

from building damages.

Government spending and new investments over a 9- to 

10-year period have a stimulating effect on the economy that 

can counteract some of the job and population losses. If total 

impacts and stimulus effects are combined, the region’s net 

employment loss in the first year is still more than 496,000 

jobs—a 10 percent decrease compared to the regional 

baseline forecast. Results show a regional economy that could 

experience a deep recession with more severe effects in the 

most strongly affected area. Much of the economy could 

recover to the pre-earthquake growth path within a few years, 

but parts of the San Francisco Bay region do not recover to 

pre-earthquake employment levels until about 7 years later 

(2025). The region returns to within about 1 percent of the 

2017 projected employment track by 2025 (fig. 1).

To put this in perspective, the HayWired economic 

impact analysis described here shows employment losses 

experienced in the east bay that are much sharper and deeper 

than during recent recessions, but with a faster rate of 

recovery than from either the dot-com recession of 2001 or the 

financial-crisis-related Great Recession that reached a trough 

in mid-2009. Figure 2 compares the effects of the HayWired 

scenario on employment with the effects of the last three 

recessions on east bay employment.

The speed of recovery would be helped by the continued 

economic strength of the Nation as a whole and other parts 

of the San Francisco Bay region, and by the assumption that 

individual firms recover rather than relocate. Employment 

losses in the San Francisco Bay region are of a magnitude 

similar to that experienced in the dot-com recession, but it 

ultimately took the region much longer to recover the jobs lost 

in the dot-com recession than the recovery illustrated in the 

HayWired scenario economic analysis drawn from the REMI 

model. In the dot-com bust, the region lost its main engine of 

growth. In contrast, effects from the HayWired scenario are 

more diversified among sectors, public money is invested in 

the recovery, and many businesses in undamaged parts of the 

region continue to operate.

All sectors experience jobs losses in the first few years 

after the HayWired earthquake scenario mainshock, relative 

to growth that would have occurred without the earthquake 

(fig. 3). The construction sector is one of the first to be 

stimulated by year three, as recovery spending picks up after 

initial delays (as were experienced after the Christchurch, 

New Zealand, earthquake in 2011), and other sectors return 

to normal. The accommodations and food services sector has 

the largest employment loss in 2018, at almost 59,000 lost 

jobs (19 percent), followed by the professional, scientific, and 

technical services sector (44,000 lost jobs, or 7 percent), the 

retail trade sector (43,000 lost jobs, or 10 percent), and the 

Table 4. Total employment difference from all effects of the HayWired scenario mainshock relative to the undisrupted Association of 

Bay Area Governments’ 2017 projection for the San Francisco Bay region, California.

[ABAG, Association of Bay Area Governments; %, percent]

Subregion 2018 

(year of earthquake)

2019 

(1 year after)

2022 

(4 years after)

2027 

(9 years after)

2040 

(22 years after)

East bay −238,518 −74,107 −48,398 −736 −3,149

North bay −22,844 −10,136 −12,164 −780 −1,224

West bay −145,844 −25,566 −25,422 −1,058 −3,619

South bay −107,998 −22,300 −9,622 1,635 −2,380

San Francisco Bay region −515,204 −132,108 −95,606 −940 −10,373

Regional percentage compared to ABAG 2017 projection −10.1% −2.6% −1.9% <0.1% −0.2%
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 7

men20-7424_fig01 — Originally Kroll REMI (Chp. V3) figure 5B

East bay

North bay

West bay

South bay

Bay region

Rest of California

75

80

85

90

95

100

105

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

EXPLANATION

Year

Percent employment relative to

PBA 2040 forecast

Figure 1. Line graph showing the percentage of employment difference resulting from the HayWired earthquake 

scenario in the San Francisco Bay region, California, by subregion compared to Association of Bay Area 

Governments (ABAG) regional and statewide projections. PBA 2040 is the ABAG Plan Bay Area 2040 forecast.

80

70

90

100

110

120

130

1 2 3 4 5 6 7 8 9 10 11

Index, in percent

1990–2000

2000–2007

2007–2016

HayWired

EXPLANATION

Years after peak

Figure 2. Line graph showing the recovery progression for the three most recent recessions from prerecession 

peak to peak of recovery or next upturn for the east bay subregion of the San Francisco Bay region, California, 

compared to job projection in the HayWired scenario. One hundred percent represents the peak before each 

downturn. Data from Kroll and others (this volume), based on California Employment Development Department 

data and, for HayWired projections through 2027, Association of Bay Area Governments Planning and Research 

Department REMI model version 1.7.8, adjusted control NC3RC1. REMI refers to models produced by Regional 

Economic Models, Inc.

administrative and waste management services sector (32,000 

lost jobs, or 10 percent). Nevertheless, the region returns to 

a strong growth path within less than a decade, and by 2040, 

regionwide employment is only 10,000 below projections 

without the earthquake.

Although the initial net effect of the earthquake on 

population is smaller than employment effects relative to 

the regional growth projection, the population effects last 

longer in this analysis—the population in the region is below 

the ABAG projection without an earthquake for more than 

a decade. The population in the San Francisco Bay region 

decreases by about 145,000 in 2018 relative to projections, of 

which 83,000 occurs in the east and north bay. Population net 

loss in the east bay after the HayWired scenario earthquake 

includes those who move for economic reasons and those 

who retire, who are assumed in the analysis to choose not to 

rebuild but instead leave the area. These changes continue to 

have a small effect on the region’s population throughout the 

forecast—the “economic” portion of the population returns 

as the jobs return, but the “noneconomic” departures (such as 

retirees) take longer to return, if ever. By 2040, the population 

in the San Francisco Bay region remains a net loss of about 

21,000 people compared to the regional control forecast; see 

figure 4. These declines are small in percentage terms (around 

4 percent at the peak in 2022, and only 0.2 percent compared 

to the 2040 forecast) compared to the 7.8 million regional 

residents in 2018 and projected 9.5 million residents in 2040, 

according to “Plan Bay Area 2040” (ABAG Planning and 

Research Department, 2016; Kroll and others, 2017).

Varying public spending and other assumptions affect 

the model results, and policies assumed before and after the 

earthquake may also determine the outcomes for individuals, 

communities, and the region as a whole. For example, 

sensitivity testing of an increase in postdisaster construction 
8 The HayWired Earthquake Scenario—Societal Consequences

men20-7424_fig03 — Reformatted data, but based on Kroll REMI (Chp. V3) figure 7

−100,000

−75,000

−50,000

−25,000

−87,500

−62,500

−37,500

−12,500

12,500

0

−100,000

−75,000

−50,000

−25,000

−87,500

−62,500

−37,500

−12,500

12,500

−100,000

−75,000

−50,000

−25,000

−87,500

−62,500

−37,500

−12,500

12,500

0

0

Number of jobs

2020 2025 2030 2035 2040 2020 2025 2030 2035 2040 2020 2025 2030 2035 2040 2020 2025 2030 2035 2040

Year

Other Services Professional and Business Services Trade Transport, Warehousing, and Utilities

Financial Services Government Information Manufacturing

Arts and Accomodation Construction Education and Health Services Farm, Forestry, and Mining

Figure 3. Bar graphs showing San Francisco Bay region, California, employment change projections after the HayWired 

scenario mainshock (in 2018) through 2040 by major North American Industry Classification System industrial sector. 

Employment is plotted relative to Association of Bay Area Governments regional growth projections.
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 9

men20-7424_fig04 — Originally Kroll REMI (Chp. V3) figure 6B

93

94

95

96

97

98

99

100

101

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Year

East bay

North bay

West bay

South bay

Bay region

Rest of California

EXPLANATION

Percent population relative to

PBA 2040 forecast

Figure 4. Line graph showing population curves in the HayWired scenario for the San Francisco Bay 

region, California, relative to the Association of Bay Area Governments (ABAG) regional and statewide 

projections. PBA 2040 is the ABAG Plan Bay Area 2040 forecast.

costs and an inadequate supply of construction workers 

significantly slows down recovery.4 The pace and level of 

spending in response to the earthquake and the source of funds 

for rebuilding also influence the pace and level of recovery in 

the region.

How Business Characteristics and Location 

affect Vulnerability and Outcomes

The subchapter “Characteristics of Businesses Disrupted 

by Building Damages from the HayWired Scenario Mainshock” 

analyzes attributes of businesses vulnerable to limited or 

restricted use of their buildings as a result of extensive and 

complete damage (as determined by the Hazus-MH 2.1 

loss-estimation software) from the HayWired scenario. The 

risk of disruptive building damage is estimated for business 

establishments by location, industry, size, structure, and 

ownership. For example, business establishment risk by location 

is the percentage of business establishments with disruptive 

building damage in a county divided by the total number of 

establishments in that county. Through a background review 

of past research, this chapter also recognized significant 

differences in the ability of various businesses and owners to 

prepare for and respond to an earthquake. Both the background 

research and the vulnerability findings suggested the value of 

exploring policies and programs to mitigate the impacts of an 

earthquake of the HayWired scenario magnitude for certain 

business characteristics.

Above average disruptive building damage risk for business 

establishment characteristics is shown in figure 5. The key finding 

is that location is the most distinctive attribute for this risk and a 

driver of other smaller risk differences.

• Alameda County establishments face the highest risk 

(25 percent of establishments), followed by Contra 

Costa County.

• Business establishments in the construction sector have a 

slightly higher risk resulting from greater concentration 

in the east bay and the building types occupied by 

construction firms. This is important in light of the current 

construction worker shortage, recovery challenges of small 

San Francisco Bay region construction businesses, and 

increased construction costs that delay overall recovery, as 

shown in the macroeconomic analysis.

• The largest businesses (with 500 or more employees) have 

a slightly lower level of risk of building damage, which 

could result from occupancy of modern buildings or 

location in less affected areas in this scenario. In contrast, 

smaller revenue (below $100,000) businesses appear more 

likely to suffer disruptive building damage and also have 

fewer resources to help in recovery.

• Minority-owned small businesses are slightly more 

likely to be in areas where buildings are at greater risk 

of disruptive damage—more than 9 percent, compared 

to the range of 6 to 8 percent for non-minority-owned 

establishments. This result reflects the presence of 

relatively more minority-owned establishments (4.6 

percent of establishments and 7 percent of employment) 

in Alameda County, the most affected county, and 4

The issue of construction worker availability is addressed more fully by 

Littlehale (2019).
10 The HayWired Earthquake Scenario—Societal Consequences

in the sectors of manufacturing and wholesale trade, 

which have more disruptive building damage risk 

associated with location and building types. Some 

research has shown minority-owned establishments to 

be more vulnerable than other businesses for a variety 

of reasons relating to resources and networks. In this 

case, identifying these businesses as “vulnerable” is 

largely because of the vulnerability of the sectors and 

locations of these businesses. The situation for these 

establishments should not be confused with many of 

the most successful, well-capitalized, minority- or 

immigrant-owned businesses that started up in the San 

Francisco Bay region.

• If the risk to businesses is weighted by employment 

numbers at the establishments, manufacturing sector 

risk increases from 8.5 to 9.1 percent. Conversely, 

employment-weighted risk is less than establishment 

risk in Alameda County (22.9 percent) and the 

warehouse/transportation sector risk drops from 9.4 to 

7.2 percent, meaning that fewer employees are in the 

riskier buildings for those characteristics.

• Fire hazard increases disruptive building damage 

risk most for businesses in Alameda County and 

for education and public administration sector 

businesses. The vulnerability of education and public 

administration sector businesses reflects the allocation 

of burned buildings to sectors based on the 1995 

Northridge earthquake fire data—the distribution 

among building occupancy could be quite different in 

the San Francisco Bay region.

Geographic Concentrations of Impacts and their 

Interactions—A Spatial Analysis

Traditional macroeconomic impact analysis of building 

and infrastructure damage assessments provides an aggregate 

estimate of effects the HayWired scenario could have on 

the regional economy. Yet macroeconomic analysis does 

not adequately capture the fact that these effects are spread 

unevenly across counties and subregions nor the effects of 

the spatial relations between jobs and homes. The subchapter 

“Spatial Analysis of Industries, Employment, and Commute 

Flows in Areas of Concentrated Damage from the HayWired 

Earthquake Scenario” provides a geographical examination 

of potential disruption, focusing specifically on areas with 

concentrated building damage, and considers effects on both 

employee workplaces (by industry group) and homes (by 

single-family/duplex, multifamily, or group-living type).

Concentrated Building Damages

The total number of census tracts where the percentage 

of extensive or complete building damage is concentrated—

greater than 20 percent from earthquake and fire hazards—is 

173, out of a total of nearly 1,600. There are seven subareas 

in the region that contain these tracts (fig. 6), which make 

up about 11 percent of the total number of tracts in the 

nine-county San Francisco Bay region. The 173 tracts are 

primarily located in Alameda and Contra Costa Counties, 

with fire impacts also concentrated in Marin and Solano 

Counties. The cities of Hayward and San Leandro have older 

downtown cores with concentrations of vulnerable building 

0 5 10 15 20 25 30

Percentage

Alameda County

Contra Costa County

Male-minority-owned businesses

Construction sector

Manufacturing sector

Transportation and warehouse sector

Female-minority-owned businesses

Branch ownership structure

Wholesale trade sector

Businesses that have <$100,000 in revenue

Retail sector

Businesses that have 100–500 employees

Businesses older than 26 years

Businesses 6–10 years old

Business/owner characteristics

Figure 5. Plot showing business characteristics with average and larger risk of disruptive building

damage from earthquake hazards in the HayWired scenario in the San Francisco Bay region, California.
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 11

men20-7424_fig06 — Originally WeinBelzer (Chp. V5) figure 2

Hydrology from U.S. Geological Survey National Hydrography Dataset, 2016

Boundary data from U.S. Census Bureau TIGER data, 2016

Park and highway data from OpenStreetMap, 2017

Universal Transverse Mercator zone 10N projection 

North American Datum of 1983 EXPLANATION

Tract with concentrated building damage from earthquake hazards

Additional tract with concentrated building damage from fire

Preserved land

Economic subarea outline

Hayward Fault rupture

Highway

0 4 8 KILOMETERS

0 4 8 MILES

San Pablo Bay

San Francisco Bay

PACIFIC OCEAN

ALAMEDA

SOLANO

MARIN

CONTRA COSTA

SAN MATEO

SONOMA NAPA

SANTA CLARA

SAN FRANCISCO

122°30’ 122°

38°

37°30’

580

80

101

101

280

680

Novato

Vallejo

Central

Alameda County

Southern

Alameda County

Dublin-Pleasanton

Western

Contra Costa County

Northern

Alameda County

Novato

Vallejo

Central

Alameda County

Southern

Alameda County

Dublin-Pleasanton

Western

Contra Costa County

Northern

Alameda County

CALIF.

Map

area

Figure 6. Map of the San Francisco Bay region, California, showing census tracts with concentrated damage in 

subareas as a result of hazards caused by the HayWired scenario mainshock on the Hayward Fault. Census tracts with 

concentrated damage are defined as tracts with 20 percent or more of their total building square footage in extensive or 

complete damage according to the Hazus analysis.
12 The HayWired Earthquake Scenario—Societal Consequences

stock that are heavily damaged in the HayWired scenario. 

Downtown Oakland and San Francisco, which have some 

even older buildings are spared of the most intense shaking in 

the HayWired scenario (but could be highly vulnerable in a 

different earthquake scenario). 

Concentrated Building Damages and Sectors

Industrial/warehouse, retail/commercial, and multifamily 

buildings (commonly low-cost rentals) largely affect neighborhood 

damage concentrations from all HayWired scenario hazards. 

Fire following earthquake is a primary cause of concentrated 

damage to multifamily buildings. Group-living occupancies, 

most prevalent in the northern Alameda County subarea, are also 

vulnerable to extensive or complete damage, but represent only 

a very small share of residential square footage. One item to note 

is that efforts by the University of California to strengthen their 

dormitories may have helped mitigate this vulnerability identified 

in the Hazus analysis; this would not address vulnerability in other 

types of older, privately owned group facilities or in correctional 

facilities. Office and single-family/duplex buildings generally 

perform well with respect to damage, but the businesses and 

households occupying these buildings may still be affected by 

their location in neighborhoods of more vulnerable, generally 

older, buildings.

Household serving industries are also affected by and are 

closely tied to the households that they serve. Predominantly 

single-family/duplex residential neighborhoods would have 

trouble reestablishing themselves without household services 

(for example, schools) available. Conversely, household 

serving industries could be affected if their customers—

the households they serve—are displaced by significant 

multifamily residential damage.

Home and Workplace Relations

Home and workplace relations are defined as one of 

the following: employees (1) live and work in areas with 

concentrated damage, (2) live in areas with concentrated 

damage but work in areas with less-concentrated damage, (3) 

work in areas with concentrated damage but live in areas with 

less-concentrated damage, or (4) live and work in areas with 

less-concentrated damage (fig. 7). In the case of earthquake 

and fire hazards, about 15 percent of the nine-county San 

Francisco Bay region employees are affected by one of the first 

three relations. Of the 96,000 employees who live and work in 

tracts with concentrated damage, 70 percent do so in the same 

subarea, and 57 percent of employees that live and (or) work in 

the same subarea do so in central Alameda County. 

With nearly 420,000 employees living and (or) working in at least one tract with concentrated damage in the 

nine-county region, job losses or relocation and employed 

resident displacement have the potential to geographically 

widen business impacts in addition to commuter interruption 

analyzed in the REMI model. Approximately 81,000 of these 

employees commuted to jobs in tracts with less-concentrated 

damage in Alameda County (Alameda County remainder in 

fig. 8). Further afield, around 50,500 employees commute to 

San Francisco and about 32,500 employees commute to Santa 

Clara County. Employment districts, such as downtown San 

Francisco and some cities in Santa Clara County, could be 

adversely affected if many of the people who work in these 

locations are stranded by the earthquake; lose their homes, 

utility services, and (or) community services (for example, 

schools are closed); are stressed by living conditions and home 

repairs; and (or) can no longer get to work because of transportation disruptions. Since the fire hazard disproportionately 

affects residences and concentrates damages in Marin and 

Solano Counties, some businesses could struggle to fill jobs, 

as their preexisting and potential workforce no longer has 

housing accessible to jobs, similar to the outcome of the 2017 

Santa Rosa fires.

Conversely, of the 232,000 people working in areas 

with concentrated damage, half of these workers (114,000) 

are coming from less damaged residential neighborhoods 

in the remainder of Alameda and Contra Costa Counties 

(white areas within those counties in fig. 6). These workers 

could lose their jobs or be out of work for an extended period 

without a paycheck and could even relocate. Telework from 

home may be possible; office work generally has more 

flexibility for telework, but this is a less viable option for 

some of the 90,000 employees living in tracts with lessconcentrated damage and working in the goods producing and 

trade, transportation, and utility industries located in tracts 

with concentrated damage.

These neighborhood impacts, along with extended 

transportation disruptions, could have consequences well 

beyond the direct effects to individual businesses and 

households. In addition to the direct loss of jobs from damage 

and commuting disruption, a large earthquake on the Hayward 

Fault could:

1. Accelerate the exit of declining industries;

2. Exacerbate the already precarious position of specialized 

industrial clusters in older manufacturing areas and 

move manufacturing to more affordable places, creating 

ripple effects to suppliers, customers, research and 

development, and headquarter operations; and

3. Accelerate the gradual conversion of industrial to higher 

uses in mixed land uses and the region’s identified 

priority development areas, where concentrations of 

housing and office uses are planned, dislocating jobs.
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 13

men20-7424_fig07 — Originally WeinBelzer (Chp. V5) figure 12

1. Live and work in areas 

with concentrated damage

(96,292 employees)

2. Live in areas with 

concentrated damage but 

work in areas with 

less-concentrated damage

(234,202 employees)

3. Work in areas with 

concentrated damage but 

live in areas with lessconcentrated damage

(181,856 employees)

4. Live and work in areas 

with less-concentrated 

damage

(2,658,510 employees)

EXPLANATION

Area of concentrated 

damage

Area of less-concentrated 

damage

Home location

Work location

Figure 7. Cartoon showing possible home-workplace relations associated with areas of concentrated and lessconcentrated damage resulting from the HayWired scenario mainshock in the San Francisco Bay region, California.

Construction Sector Stressors and Opportunities

Both the macroeconomic and business focused 

studies single out the unique situation of the construction 

industry before and after the HayWired scenario 

mainshock. The earthquake brings both stressors and 

opportunities in the sector.

• Many local construction firms are small 

businesses located in the east bay, in buildings 

that are at risk of extensive or complete damage, 

or in areas of concentrated damage. 

• Demand for construction industry services 

will soar after the earthquake, after an initial 

slowdown, to repair and rebuild damaged 

structures, drawing new construction workers to 

the area. 

• In 2018 (the year of the scenario earthquake), 

as well as in more recent years, the industry 

has already been dealing with a very tight labor 

market, unable to find all of the workers needed to 

fulfill demand for new housing construction. This 

labor shortage is exacerbated by rising demand for 

construction workers after the earthquake.

• The labor shortage and rising demand lead 

homeowners, businesses, and public agencies 

to face higher prices, with some effects on 

the pace of recovery. This may be further 

exacerbated by the transportation disruptions 

described above.

• Because of the damage to local businesses, the 

increased demand for construction work will not 

necessarily strengthen the existing base of smaller 

construction firms, which would be unable to 

quickly take advantage of new opportunities and, 

once recovered, could face extensive competition 

from outside firms.
14 The HayWired Earthquake Scenario—Societal Consequences

men20-7424_fig08 — Originally WeinBelzer (Chp. V5) figure 20

San Pablo

Bay

San Francisco

Bay

PACIFIC OCEAN

123° 122° 121°

38°

37°

 1. Marin County remainder

 2. Novato

 3. Sonoma County

 4. Western Contra Costa County

 5. Northern Alameda County

 6. Vallejo

 7. Napa County

 8. Solano County remainder

 9. Contra Costa County remainder

10. Sacramento Valley

11. Dublin-Pleasanton

12. Alameda County remainder

13. San Joaquin Valley

14. Santa Clara County

15. Southern Alameda County

16. Central coast

17. San Mateo County

18. San Francisco County

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

MARIN

SONOMA

NAPA

SOLANO

YOLO SACRAMENTO

CONTRA COSTA SAN JOAQUIN

ALAMEDA

STANISLAUS

SANTA CLARA

MERCED

SAN BENITO

MONTEREY

SANTA CRUZ

SAN MATEO

SAN FRANCISCO

5

580

80

101

101

280

EXPLANATION

Workers commuting from central Alameda County

Fewer than 2,500

2,500 to 5,000

5,000 to 10,000

Preserved land

Economic subarea outline

Highway

10,000 to 25,000

More than 25,000

Work and reside in same 

subarea (54,463)

Hydrology from U.S. Geological Survey National Hydrography Dataset, 2016

Boundary data from U.S. Census Bureau TIGER data, 2016

Park and highway data from OpenStreetMap, 2017

Universal Transverse Mercator zone 10N projection 

North American Datum of 1983

CALIF.

Map

area

0 9 18 KILOMETERS

0 9 18 MILES

Figure 8. Map showing employed resident flow out of areas of concentrated damage resulting from the HayWired scenario 

mainshock for the central Alameda County subarea, California. Areas with “remainder” in the name are parts of counties 

outside the defined subareas, and other counties that do not have areas of concentrated damage are also included. More 

distant counties are aggregated into larger subregions: Sacramento Valley (Sacramento and Yolo Counties), San Joaquin 

Valley (Merced, San Joaquin, and Stanislaus Counties), and the central coast (Monterey, San Benito, and Santa Cruz Counties).
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 15

Policy Implications Related to the 

Economic Analyses

Public policy is a critical aspect of addressing the economic 

effects and the disruptions for workers and residents of an event 

like the HayWired scenario. Public policies include investments 

or planning that happen before a major event, as well as those 

that speed recovery and minimize disruptions after an earthquake 

occurs. Although the five reports identified critical vulnerabilities 

and causes, and in some cases, policies, the discussion that follows 

draws additionally on literature reviewed for the study and on the 

discussion during the HayWired Economic Consequences for 

Policy Interpretation workshop jointly hosted by the Association 

of Bay Area Governments and U.S. Geological Survey that was 

held on August 28, 2018.

Planning Ahead

• About $80 billion has already been invested in seismic 

strengthening of infrastructure and buildings since the 

1989 Loma Prieta earthquake (Brocher and others, 

2018). This money has likely reduced future economic 

impacts because HayWired economic analyses show 

the largest economic impacts are caused by building 

damage and transportation disruption. Continuing to 

retrofit or replace older structures and improve seismic 

building codes would continue to reduce potential 

economic impacts. Another study could use economic 

models developed for the HayWired scenario to 

quantify benefits of stronger structures.

• Designing and building to prevent fire ignitions and to be 

fire resistant would reduce not only earthquake-related 

hazards but also those related to wildland and urban 

wildfires. For example, 50 percent of buildings built using 

2008 fire codes versus 18 percent of buildings built before 

2008 survived the 2018 Camp Fire in Paradise, California. 

Impacts from fire spread can be further reduced if cities, 

regions, and the State have identified and planned for 

means of fighting fires in cases where water distribution 

has been interrupted.

• The advanced creation of policy and procedures about 

restricting access once damage occurs could anticipate 

potential tensions between keeping people safe versus 

allowing business owners into damaged buildings 

to get what they need, and efficiency of demolition 

behind a cordon versus business resumption in safe 

buildings in heavily damaged areas.

• The vulnerability of local household-serving businesses 

like food services, retail, and healthcare can have longterm effects on neighborhood resilience. Planning for 

neighborhood response and accommodating temporary 

business relocation needs in advance, as well as 

providing temporary facilities and support services for 

businesses and customers after the event, can help to 

mitigate the otherwise widespread losses that can be 

expected for businesses in these sectors.

• The impacts of building and inventory loss can be 

reduced by cooperative responses among businesses 

and neighbors and even between more and less heavily 

damaged areas. Efforts to build networking ties, 

including small business alliances, before the event can 

make it easier to develop these cooperative responses 

in a crisis period. Advance planning, including 

identification or development of communications 

and planning tools, can also improve the logistics of 

managing cooperative responses once an event occurs.

• In general, the points on inventory and supply chain issues 

raised in the previous two points could be addressed by 

reducing supply bottlenecks for responders and local 

businesses. As experienced after the north bay wildfires 

in 2017 and 2018, the increased demand for construction 

workers can be difficult to meet while the sector is 

experiencing challenges (such as labor shortages). There 

is already a current urgency for construction capability 

in the San Francisco Bay region to build more housing 

and for funded and approved transportation infrastructure 

projects. Loss of construction capacity or increases in 

construction costs because of high demand would slow 

the ability to recover, similar to the experience in Sonoma 

County after the 2017 wildfires. Long-term planning for 

resilience in the construction industry by major employers, 

trade organizations, educational institutions, and local, 

State, and Federal government can improve the industry’s 

ability to respond to catastrophic events.5 For example, 

preregistration of small construction firms within the 

region for disaster reconstruction could improve their 

participation. As the use of modular units in construction 

expands in the bay region, it would be useful to evaluate 

to what extent this approach eases delays and whether it 

would be an effective way of speeding reconstruction after 

a major earthquake.

• Even with a more robust regional construction sector, the 

scale of damage required by a major earthquake would 

tax the San Francisco Bay region’s capacity to rebuild. 

Advanced planning for temporary expansion of the 

construction workforce can help to limit bottlenecks. Such 

approaches could include developing a national network 

of firms specialized in recovery, identifying in advance 

ways to provide housing and support services for the 

temporary construction workforce that would be needed, 

and planning for emergency measures, such as easing 

parking restrictions on mobile homes and recreational 

vehicles to house the temporary workforce as well as 

displaced residents and businesses.

5

Recommendations for improving the availability of trades workers is 

addressed by Littlehale (2019); Li (2018) further discusses the rebuilding 

challenges in the San Francisco Bay region after a major earthquake.
16 The HayWired Earthquake Scenario—Societal Consequences

• Expedited permitting would help enable rebuilding 

to happen in the time period shown in the San 

Francisco Bay region economic recovery model. 

In Sonoma County following the 2017 fires, for 

example, emergency ordinances eased physical 

and occupancy restrictions on temporary housing, 

extended existing permits, and included a simplified 

design review process.6 Advanced planning for future 

contingencies (including draft ordinances outlining 

procedures for emergency situations) would better 

prepare jurisdictions to address rebuilding efforts from 

a comprehensive perspective, and effective retrofit 

programs could reduce the need in the first place.

• Regional and local jurisdictions would need to be 

prepared beforehand to launch a planning process that 

brings together local property owners and residents 

to discuss their needs as alternative travel patterns, 

land uses, and land use intensity are considered. 

Resources could be prepared in advance to instruct 

local jurisdictions on how best to document damage 

and register households and business owners needing 

or receiving assistance.

• State government and local jurisdictions may need 

to plan together to determine how the sales tax and 

property tax revenue losses of a widespread event 

could be shared and ensure that the local governments 

most in need of revenue for recovery have access to 

necessary resources. This could involve developing a 

reserve fund through contributions from State and local 

sources or an insurance program to cover lost revenues 

in affected areas.

• Similar to planning for sea level rise and fires, regional 

planners can take earthquake risk into account in land 

use and resilience planning. Land use decisions and 

earthquake planning can be integrated into regional 

responses to climate change. This approach could 

recognize the overlapping areas of projected sea level 

rise and geological risks of liquefaction during an 

earthquake.

• Major disruption of land use and routes may be an 

opportunity for improving planning, for example, to 

reduce greenhouse gas emissions and minimize risks 

from future earthquakes. Restored travel routes could 

be improved to address preexisting congestion and 

access concerns, and where appropriate, rebuilding 

could happen in some cases at higher densities to 

improve the viability of public transit use, especially 

in areas that already planned for this type of transition. 

In addition, future regional planning can examine 

6

See, for example, chapter 40 of the Sonoma County code of ordinances, 

titled Sonoma Complex Fire Disaster Recovery, available at https://library.

municode.com/ca/sonoma_county/codes/code_of_ordinances?nodeId=CH40S

OCOFIDIRE (last accessed September 11, 2020).

reallocating planned land uses away from earthquake 

risk areas, as is being considered with regard to future 

building in high fire-risk areas. 

• Policies for pre- and post-earthquake preparations can 

take into account opportunities presented by planning 

for the 21-county northern California megaregion. One 

opportunity is around goods movement. Megaregion 

goods movement studies by the regional agencies 

identify opportunities for expanding logistics and 

wholesale functions beyond the core San Francisco 

Bay region, and for diversifying the geographic 

location of tech-related manufacturing and services 

(Metropolitan Transportation Commission, 2019). 

Another opportunity is in expanding housing 

opportunities supported by new car-free commute 

options. For example, the San Francisco Bay Area 

Planning and Urban Research Association (SPUR) 

(www.spur.org) encourages a megaregional perspective 

on future growth, which would improve residential and 

business opportunities by building on growth generated 

by bay region businesses and connecting parts of the 

megaregion through new transportation investments.

The Role of Employers 

The role of employers is also of key importance.

• Inclusion of major employers, such as those in the 

technology sector and in the health industries, at all 

stages—in advanced planning, initial responses, and 

recovery—can augment the resources available when 

most needed (such as emergency supplies and mental 

health services) and also ensure that employees, 

suppliers, and other linked sectors are informed about 

immediate and possible long-term effects as an event 

unfolds.

• Employers can prepare for neighborhood effects on 

their business operations and critical infrastructure, 

impacts on employee living situations, work 

relocation plans with respect to their customers 

and employee residences, particular vulnerabilities 

of their sector, and their role in neighborhood 

resilience and recovery. This preparation could 

benefit from being done cooperatively with similar 

types of businesses and within the context of city or 

regionwide resilience plans, to be able to address the 

differing needs of businesses of different sizes and 

sectors.

• Advanced planning in areas vulnerable to heavy 

damage can reduce the impacts of restricted access 

after an earthquake by locating critical assets (for 

example, emergency operations centers, police 

services, and fire services) and backing up business 

assets (for example, servers) outside these areas.
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 17

Policies Effective After the Earthquake

• Businesses can make up for output losses by 

implementing business continuity measures, including 

shifting production in time (to catch up on lost 

production) and space (to alternative locations), and 

having backup alternatives for power, water, and 

telecommunication services.

• A quick recovery in overall employment depends heavily 

on investment for rebuilding homes, nonresidential 

buildings, and infrastructure. The robust level of recovery 

spending assumed in the economic forecast analysis drops 

the east bay job deficit from 15 percent to below 3 percent 

in 2 years and brings the east bay to within 1 percent of 

projected employment levels within 5 years. The public 

sector plays a critical role in this, not only providing a 

portion of the funding, but also providing the means 

for clearance of debris, safety checks, issuance of new 

permits, and continuity of services (such as schools).

• Private lenders can work with local officials, regional 

representatives, business organizations, and their 

borrowers to provide ways of stabilizing businesses 

and homeowners through postponed loan payments 

and expedited new loans.

• Restoration of the telecommunications sector is also 

a major factor in allowing many economic sectors to 

restore their operations. As seen in the sensitivity tests, 

if telecommunications are not sufficiently repaired 

to provide for remote work, then the losses from 

transportation disruptions could be much more severe.

• The public sector would need to work cooperatively 

with private logistic firms to ensure the delivery of 

necessary emergency supplies at the outset, to ease 

supply bottlenecks for local producers during recovery, 

and to maintain pathways for distributing final 

products.

The Relation with Housing

• Temporary housing services would be crucial in 

maintaining the labor force needed to keep ongoing 

businesses in operation and support the labor force 

needed for reconstruction. Preparedness, response, and 

recovery plans would need to recognize population 

movements and long-term displacement as central 

components of earthquake resilience. Organizations 

would need to plan for emergency, interim, and 

temporary housing, as well as registering households 

in need, and also recognize the dynamics of these 

phenomena over time and space. Identification of 

successful efforts in previous disasters may make it 

easier to respond effectively after an event.

• The San Francisco Bay region is in a critical situation 

in 2018 and 2019 with respect to housing supply, as is 

much of urban California. Had the HayWired scenario 

actually occurred in April 2018, the housing losses and 

resulting rising prices could have been a drag on the 

economy for years. Recent experience with wildfires 

has shown that vulnerability to disaster does not 

discriminate by income or cultural group. However, the 

housing stock most vulnerable to earthquake damage—

old multifamily units—is disproportionately occupied 

by households in the lower half of the income scale, 

as is discussed in a separate chapter in this volume 

that focuses on communities at risk. This emphasizes 

the importance of building more new housing for all 

income groups now, as well as being prepared with 

policies that support the replacement of the low-cost 

stock that is likely to be lost in a major earthquake 

event.

The Role of Insurance

• Investment in recovery is not only the responsibility 

of the public sector. In the sensitivity analysis, private 

insurance payments have a small effect on the outcome 

because these payments cover such a small share of 

the total damage. Were a larger share of homes and 

buildings covered by insurance, recovery would be 

better resourced, and displacement and outmigration 

could be less. Judging from past experience, close 

cooperation between assistance agencies, such as the 

Federal Emergency Management Agency and the 

California Governor’s Office of Emergency Services, 

and private insurers may be needed to ensure the 

timely consideration and payment of claims.

• Regional agencies and local government could mount 

a campaign to educate public and private entities about 

earthquake insurance coverage and common issues, 

including underinsurance, interpreting insurance policy 

language, and policy changes, as well as recommend 

new approaches to insurance that might better meet 

the needs of households in risky locations. The context 

could be extended to fire and flood insurance and 

influences of sea level rise and climate change.

• Contingent business interruption insurance is important 

to cover losses from indirect causes, such as reduced 

patronage when business is inaccessible to customers 

because of cordons, checkpoints, or fear. Review 

of how existing policies supported businesses after 

disaster interruption in previous events would help to 

suggest modifications in the design of the product.

• Recovery funding for small businesses is an innovation 

opportunity in community development. Beyond 

suggestions to make changes to the Small Business 
18 The HayWired Earthquake Scenario—Societal Consequences

Administration’s loan policy, cross-sector and (or) 

cross-agency collaboration can support and guide small 

businesses by providing individualized small business 

risk assessments and a small grant to help implement 

recommendations (for example, adequate insurance 

coverage, digitizing records, or adding a generator). Small 

businesses could be incentivized to become eligible for 

postdisaster funding that fits their needs during critical 

time periods by implementing preparedness actions. By 

the nature of many small businesses, needs also relate 

to family needs. The Federal Emergency Management 

Agency and the U.S. Economic Development 

Administration could be among the organizations 

collaborating with the Small Business Administration to 

provide support for small businesses with regional and 

subregional economic development organizations and to 

coordinate small businesses recovery with broader local, 

neighborhood, and regional needs.

• Resilience preparation, innovation, and entrepreneurship 

are action areas of the San Francisco Bay region’s 

recently adopted Economic Action Plan—part of the 

Comprehensive Economic Development Strategy 

endorsed by the U.S. Economic Development 

Administration in fall 2018—and these action areas are 

likewise under discussion in the preparation of Plan Bay 

Area 2050. This provides a framework for linking actions 

in innovation and entrepreneurship with efforts to make 

the region’s local economies recover quicker and stronger 

in the event of a major disaster.

Closing Statement

Macroeconomic analyses of the HayWired scenario focused 

on changes in employment and output levels in the San Francisco 

Bay region. Although these losses can be substantial, similar to a 

recession, the findings point to much larger and more challenging 

disruptions in the lives of residents who live near the Hayward 

Fault. The residents and communities with the highest levels 

of impact are expected to rebuild and recover slower than the 

recovery of a diverse and large economy, such as the nine-county 

San Francisco Bay region. The impacts on humans would be more 

devastating than the impacts on the economy.

Whether the focus is on the economy or the disruptions in 

the lives of residents, all of the studies identify effects that can 

be reduced by advanced planning, including actions that can 

be taken in advance of the earthquake and in post-earthquake 

recovery policies. Various policies imply actions by all levels 

of government but also stress the importance of businessled policies. Moreover, coordination among employers, 

governments, and neighborhood groups would minimize 

earthquake impacts.

The region now faces the challenge of planning for risks 

of sea level rise, wildfires, and other climate change effects, in 

addition to challenges posed by a large earthquake. This suggests 

that land use and transportation planning for the San Francisco 

Bay region and, indeed, the 21-county northern California 

megaregion, can help in minimizing human and economic 

disruptions by integrating all of these risks into future rounds of 

planning and policies.

References Cited

Association of Bay Area Governments Planning and Research 

Department, 2016, Regional forecast for Plan Bay Area 2040: 

Association of Bay Area Governments, 25 p.

Brocher, T.M., Gefeke, K., Boatwright, J., and Knudsen, K.L., 

2018, Reported investments in earthquake mitigation top $73 

to $80 billion in the San Francisco Bay Area, California, since 

the 1989 Loma Prieta earthquake: U.S. Geological Survey 

Open-File Report 2018–1168, 18 p., https://doi.org/10.3133/

ofr20181168.

CoreLogic, Inc., 2018, Financial implications of the 

HayWired scenario: CoreLogic, Inc., Special Report, 

accessed February 11, 2019, at https://www.corelogic.com/

downloadable-docs/corelogic_haywired-scenario_r5.pdf.

Kroll, C., Jaramillo, J., Lu, S., Olsen, A., and Wong, H., 2017, 

Regional forecast of jobs, population and housing; Plan 

Bay Area 2040—Final supplemental report: Association of 

Bay Area Governments and Metropolitan Transportation 

Commission, 32 p., [available at http://2040.planbayarea.

org/sites/default/files/2017-07/Regional%20Forecast%20

Supplemental%20%20Report_Final_7-2017_0.pdf as of 

April 29, 2020].

Li, R., 2018, Labor shortage could cripple Bay Area rebuilding 

after next big quake: San Francisco Chronicle, October 17, 

2018, accessed September 8, 2020, at https://www.sfchronicle.

com/business/article/Labor-shortage-could-cripple-Bay-Arearebuilding-13312821.php#.

Littlehale, S., 2019, Rebuilding California—The Golden 

State’s Housing Workforce Reckoning: Smart Cities 

Prevail, 49 p., accessed February 25, 2020, at https://www.

smartcitiesprevail.org/wp-content/uploads/2019/01/SCP_

HousingReport.0118_2.pdf.

Metropolitan Transportation Commission, 2019, Northern 

California Megaregion Goods Movement Study executive 

summary: Metropolitan Transportation Commission, 21 p., 

accessed September 24, 2020, at https://mtc.ca.gov/sites/default/

files/Northern_California_Megaregion_Goods_Movement_

Study.pdf.
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 19

Reflections on the COVID-19 Pandemic, June 2020

By Cynthia Kroll, Stephen Levy, and Anne M. Wein

The Coronavirus Disease 2019 (COVID-19) pandemic 

began during the completion of the economic analysis of the 

HayWired scenario. Though the analysis is complete, there are 

a number of implications for the analysis, as well as policies 

towards earthquake preparedness, that might be learned from 

the COVID-19 pandemic experience in the San Francisco Bay 

region. In particular, we highlight the importance of earthquake 

preparedness and the opportunity to reduce our vulnerabilities to 

future earthquakes while recovering from this pandemic.

Pandemics and Earthquakes are 

Different Types of Disasters

It is important to keep in mind some of the differences 

between the COVID-19 pandemic and the effect of an earthquake 

or other spatially contained disaster. A disaster such as the 

HayWired scenario earthquake causes localized devastation to 

lives and livelihoods. The most vulnerable areas have higher 

shares of aged multifamily housing, industrial, and commercial 

buildings. These areas tend to be occupied by the households and 

businesses with the fewest resources for response and recovery, 

increasing the risk to both low- and middle-wage jobs and 

likely increasing the income gap between high- and low-income 

households. The HayWired scenario highlights a potential loss 

of more minority-owned businesses that have fewer resources 

available for recovery. From the regional, state, and national 

perspective, the HayWired event will stimulate additional 

economic activity as rebuilding occurs. Some of the lost economic 

output will be shifted geographically to other business, nonprofit, 

or government branches, shortening the duration of the aggregate 

effects, even as it creates short- and (or) long-term challenges for 

the recovery near the earthquake’s epicenter—one area’s loss may 

be another area’s gain. Impacts on local and state government 

coffers will vary widely. A few jurisdictions may lose a very high 

share of revenue, but the effect is not universal across the state 

level, and even San Francisco Bay region jurisdictions more 

distant from the epicenter may remain fiscally sound. 

The COVID-19 pandemic is a very different case, where 

much of the global economy was put into a policy-induced 

decline—a self-imposed “coma,” as some have described 

(Krugman, 2020)—but there has been no physical damage to 

buildings, utilities, and transportation systems. In the pandemic, 

entire segments of the economy (for example, cultural events, 

sports, many personal services, and real estate) shut down 

almost completely, and any economic activity that depended on 

transportation, whether the airline or cruise ship industry or the 

oil industry, has been heavily dampened. Closures of schools 

and dependent care centers have affected the productivity of the 

workforce; this has also occurred after earthquakes, but the options 

for handling the situation differ. Sectors with large numbers of 

low-wage employees with minimal resources have experienced 

the greatest challenges. Furthermore, the social unrest that has 

emerged during the pandemic, sparked initially by the death of an 

unarmed black man at the hands of police, underlines the fragility 

of low-income and minority communities when economies 

become stressed.

During the pandemic, the lack of physical damage has made 

it easier for some types of local services (for example, restaurants 

and retail) to shift to other methods of delivery, including mail 

order, take-out, and pick-up options (McGrath, 2020). Yet sales 

have dropped sharply despite these efforts and some business have 

closed, although the experience varies widely depending on the 

type of business. If the effects of the pandemic on the economy 

and employment are long lasting, there may be excess commercial 

space rather than a loss of space as in an earthquake or wildland 

fire. In addition, residential rents may decrease, in contrast 

to expected rental increases and a construction boom in the 

HayWired scenario. This could occur from the pandemic because 

of the number of recently unemployed people, or because highwage workers are given the option to telecommute from remote 

locations, easing the pressure on bay region housing markets. 

Housing prices may also drop if more homes go into forbearance 

or foreclosure. Revenue losses from the pandemic are expected 

to be much more universal for state and local governments, as tax 

revenues from sales, income, and capital gains decline.

In both the HayWired scenario and COVID-19 pandemic, the 

timeline for recovery is uncertain. History tells us that for a large 

earthquake, recovery takes years. Will COVID-19 be the same? 

Much of the uncertainty around HayWired scenario recovery is 

based on how quickly and how much funding is available for 

rebuilding, as well as around the frequency and level of damage 

of aftershocks over time—making recovery a moving target. With 

COVID-19, we face even greater uncertainty over the trajectory 

of impact (human, social, and economic) and recovery capacity 

and timelines, which are intertwined with health, behavioral, 

and political issues. Projections for loss of life from COVID-19 

vary by factors of ten or more and depend in part on the results 

of health and safety guidelines ranging from shelter-in-place to 

social distancing and testing for exposure and spread. Uncertainty 

abounds as sectors of the economy are reopened on varying 
20 The HayWired Earthquake Scenario—Societal Consequences

timetables and under different guidelines throughout the country. 

When a new normal after COVID-19 will be reached and what 

that new normal will be are also unknown. Will telework continue, 

thus reducing transportation and fuel demand? Will development 

of successful treatments or a vaccine allow us to reduce social 

distancing and reopen additional segments of the economy? Will 

some industries, such as restaurants, entertainment/leisure, or 

either small or major retail outlets ever recover? Will the societal 

inequities exacerbated by the pandemic be addressed by changes 

in policy?

COVID-19 Pandemic Experience Can 

Inform the HayWired Scenario Analysis

The COVID-19 pandemic experience could inform both 

the HayWired scenario regional and spatial analyses of impacts. 

Sectors that rely primarily on knowledge workers have shown 

great versatility for continuing to operate, even as public 

transportation use dropped by 90 or 95 percent throughout the 

region as a whole (Bay Area Rapid Transit, 2020). Major San 

Francisco Bay region employers, like Google and Facebook, took 

early action to direct all employees to work from home (Elias, 

2020; Eadicicco, 2020). Government offices have also continued 

to provide some professional services through telecommuting 

employees as well as keeping workers in critical positions, like 

maintenance, on the job. Work has continued via telework at a 

higher level compared to the assumptions made in the HayWired 

scenario analysis. 

The resilience of some of these sectors even in the face of 

total shelter-in-place policies is consistent with the assumptions 

discussed in the macroeconomic analyses of the HayWired 

scenario. A longer run analysis of the effects of the pandemic over 

the next 2 years may help to highlight the resilience measures that 

could also operate after an earthquake across other sectors over 

time, such as production rescheduling, inventory management, 

conservation, and input substitution. Yet some repurposing of 

spaces for immediate business and housing needs, or adaptations 

of production processes and delivery services to meet changed 

demands, could be very different after an earthquake as compared 

to the broad pandemic, including the need to find new locations 

to accommodate for building damage and concentrated damages 

in business districts. Planning for and adjusting to spatial 

economic shifts around stranded assets (for example, underutilized 

commercial space with work from home) from the pandemic may 

also inform shifts from heavily damaged areas and their recovery.

At the same time, the COVID-19 situation raises supply 

chain questions that could affect the kinds of analyses done 

for the HayWired scenario. Even with no physical disruption 

to transportation, communications, production, or logistics 

facilities as in the case of a major earthquake, supply bottlenecks 

abound (for example, for personal protective equipment [Asian 

Development Bank, 2020] and ventilators [Ranney and others, 

2020]). Distribution networks have been slow to adapt to shifts 

in the sources of demand—for example, although grocery 

shelves are sometimes empty of basic staples and food banks 

lack enough capacity to meet the growing demand, animals are 

being euthanized and crops plowed under because the normal 

distribution network has broken down (Yaffe-Bellany and Corkery, 

2020; Blake and Walljasper, 2020). After an earthquake, supplies 

for personal hygiene, medical equipment, medication, and many 

types of grocery staples may suddenly be in increased demand. 

Companies that are still operating will continue to have a steady 

demand for inputs, but disrupted businesses will sharply decrease 

orders. Even households that did some advance preparation may 

find that the resupply of basic necessities recovers much more 

slowly than anticipated. The pace of recovery after an earthquake 

will be affected by how quickly logistics challenges, as well as 

physical damage, can be addressed for the supply chain. 

Important Policy Lessons

Although mitigation investments have reduced seismic risk 

in the bay region, the impacts of the ongoing COVID-19 pandemic 

and the insights from the HayWired scenario economic analyses 

herein remind us that much more is needed to anticipate, plan, 

and prepare for earthquakes. The HayWired scenario volume 3 

includes information and suggestions for actions that help prepare 

residents, businesses, nonprofit, and government organizations to 

reduce the potential severity and duration of economic impacts of 

a future earthquake. The experience of responding to the COVID19 pandemic has lessons that could be used to inform policy about 

both preparing for a major earthquake and recovering from the 

pandemic itself.

Advance Preparedness and Mitigation

The pandemic has highlighted the importance of 

preparedness. The San Francisco Bay region and California have 

reacted quickly and transparently to the challenges faced by the 

COVID-19 pandemic. The global experience underlines the 

costs of being unprepared, and even the bay region was not fully 

ready for the types of unprecedented actions required to respond 

to the pandemic. With the gradual approach of the virus’ spread 

to the bay region, counties had time to develop strategies and, 

to date, have deflected some potential impacts, particularly on 

the healthcare system (Ho, 2020; Kahn and Marinucci, 2020). 

In contrast, there will be no gradual onset of a major earthquake, 

and once it arrives, we will have lost the time needed to make 

preparations. We know with some certainty that the bay region 

will experience effects from a large earthquake, possibly in the 

not-so-distant future, which will challenge our healthcare systems, 

supply chains, and many economic sectors. Actions are needed 

to improve resilience before an event to lower potential damage, 

and advance planning for post-event response is needed to 

anticipate and avoid missteps that may otherwise characterize the 

implementation of well-intentioned responses (Federal Emergency 

Management Agency, 2016; M.C. Comerio, written commun., 

2020). Taking steps to understand the needs and challenges of 
Chapter V1. Summary of Economic Impact Analyses and Policy Implications 21

low-income and minority communities now can better prepare 

these communities to plan for and provide recovery efforts that 

address the needs of all residents (Markhvida and others, 2020). 

A COVID-19 Recovery Plan Can Spur Earthquake 

Preparedness

Another policy consideration is that recovery steps that will 

be taken to tighten supply chains and restore our economy during 

and after the pandemic can also become investments in physical 

improvements and strategic plans needed to strengthen our 

resilience to seismic risks. There are two main ways a COVID-19 

recovery program can be helpful in earthquake preparedness.

1. Stimulus packages to spur economic recovery from the 

pandemic-induced recession can include support for 

infrastructure investments that also increase earthquake or 

fire resilience, such as retrofitting buildings, strengthening 

transportation and other infrastructure, and improving our 

telecommunications capacity.

2. The pandemic has increased the urgency for building 

housing to alleviate overcrowding and homelessness—two 

conditions that accelerate the spread of the virus but are also 

of critical concern to the region’s economic health and its 

post-earthquake resilience. Building more housing, particularly affordable housing for low- and moderate-income 

and essential workers, is already a critical challenge in the 

bay region, and one that will increase with new regional 

housing-needs targets from the State that focus on reducing 

the number of cost-burdened and overcrowded households 

(Kirkeby, 2020). 

A Final Thought

In the midst of the current human and economic pain from the 

COVID-19 crisis, it is tempting to address one crisis at a time, and 

to postpone preparing for the one that could happen tomorrow—or 

in 30 years. We believe that would be a lost opportunity if we do 

not tie the lessons of loss and resources for recovery from one event 

toward improving resilience in a later event.

Acknowledgments

This section gained from the insights of several reviewers, 

including Jeff Bellisario of the Bay Area Council Economic 

Institute, Dena Belzer of Strategic Economics, Mary Comerio 

of the Department of Architecture at the University of 

California, Berkeley, Kara Gross of the Silicon Valley Economic 

Development Alliance, Lynn von Koch Liebert of Housing and 

Consumer Services at the California Business, Consumer Services, 

and Housing Agency, Jon Haveman of Marin Economics, and 

Adam Rose of the Center for Risk and Economic Analysis of 

Terrorism Events (CREATE) of the Sol Price School of Public 

Policy at the University of Southern California. Several of their 

suggested policy implications were incorporated into the final text. 

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