of the Marmara earthquake, the Turkish parliament debated enforcing existing building codes and retrofitting private buildings. It may be that concerns about risks and returns moved the Parliament towards a conclusion that such measures were beyond the means of taxpayers to carry out (Anbarci, Escaleras and Register, 2005).

_<u>Box 8: Two estimates of benefits and costs of housing retrofit on the back of an envelope</u>_ <mark>Houses built on hillsides in Los Angeles County are particularly prone to earthquake damage – during the 1994 Northridge earthquake, 4 percent of such houses were damaged.</mark><sup>20</sup> <mark>The average retrofit cost of such houses, involving an anchored bracing system, is estimated at $14,000. The likelihood of a hillside house being damaged by an earthquake is about 0.04 percent per year. The average cost of repair or replacement from that damage is in the region of $100,000.</mark><sup>21</sup> <mark>In the average year, then, the payback on a $14,000 investment is $40 in terms of earthquake damage avoided, or a 0.28% real return (based on data in von Winterfeldt et. al. 2000). This does not account for household property damage and the cost of alternate housing while repairs/reconstruction is carried out, but even if these costs doubled repair/replacement costs, real returns would remain significantly below one percent.</mark> <mark>Net benefits of retrofit are also likely to be higher where initial building standards are lower –this will be the case in many developing countries. Take the case of adobe buildings. There are about seven million people in El Salvador. Assuming an average household size of five, and that half of households occupy adobe buildings, this suggests that there are about 700,000 adobe houses in the country. If all of the 200,000 damaged and collapsed buildings in the 2001 earthquake were households, this suggests an upper-end estimate of a 29 percent chance of the house being damaged or destroyed by an earthquake. In the year of a major earthquake, this suggests that the chance that an adobe house would collapse and kill someone was around two per thousand. Over the past 100 years, El Salvador has been hit by at least 13 major earthquakes.</mark><sup>22</sup> <mark>This suggests that in the average year, the chance that an adobe house will collapse and kill someone is approximately 1 in 5,000. Assume that retrofitting costs $250 per building (the number is estimated from the additional cost of disaster-proofing a house from ISDR and UNDP, 2007 – although note this applied to wind and flood damage). At a ten percent discount rate, this suggests a cost per life saved of around $121,000 –although note that this does not account for the benefits of avoided rebuilding costs. This is a comparatively high return to retrofit compared to Los Angeles for example, nonetheless, compare this cost per life saved to other health interventions presented elsewhere in the paper.</mark> Regarding public buildings, positive benefit-cost ratios for retrofitting have been estimated in a number of cases – in Colombia, for example (Ghesquiere et. al. 2006). But

> 20 This amounts to 374 houses.  Note this calculation does not include the value of statistical lives saved by retrofit.  Of the deaths in LA County due to the Northridge earthquake, only six occurred in single-family homes (Peek-Asa et. al., 1998).  It is not clear how many of these six deaths involved hillside houses of the type under discussion in the box.  Property damage for these houses alone amounted to approximately $19 million.  Overall, the economic cost of fatal injuries is estimated at only 0.16 percent of the total economic cost of the Northridge earthquake (Porter et. al. 2006), suggesting that a calculation that did include the statistical value of human lives would not considerably alter the conclusions presented in the box.

> 21 A conservative estimate based on Figure 2.1 of von Winterfeldet et al. (2000)

> 22 - <u>http://www.paho.org/english/sha/be_v22n1 earthquakes.htm</u>

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