Mike Butler: Earthquake strengthening bad policy.

Kneejerk policy is never good. For those skeptical about the government’s push for nation-wide building strengthening after the Christchurch earthquakes, new research shows that the official view that there are 15,000 to 25,000 buildings likely to collapse in a moderate earthquake is grossly incorrect.

Economist Ian Harrison, who is author of “Towards a rational discussion of earthquake strengthening requirements: a critical analysis of the MBIE proposals”, says the ministry expert’s own analysis shows the costs of the proposals are 50 times the benefits. For proposals to be beneficial, the costs need to be less than the benefits.

With total benefits of around $42-million and costs of about $2.4-billion it is almost entirely a waste of money. It will save very few lives but it will have a serious impact on the homes and savings of the affected owners and could have a devastating effect on the retention of heritage buildings, Harrison wrote.

A test of an “earthquake prone” building, in proposals released by the Ministry of Business, Innovation and Employment in December 2012 on earthquake strengthening existing buildings, is much more severe than defined in law, leading to the incorrect conclusion, Harrison wrote.

Some councils are using the test to designate earthquake prone buildings, causing building owners to incur substantial unnecessary costs. It is likely that council designations would not survive a legal challenge, he wrote.

What is a moderate earthquake? A moderate earthquake is defined in relation to the “large” earthquake that is used to design a new building. The large earthquake is broadly defined as a one in 500 year event and is measured using a technical analysis that captures the force exerted by the earthquake on a building.

The magnitude of the force will depend on the seismicity of the area. In Wellington a one in 500 year earthquake is broadly defined as having an average peak ground acceleration of 0.4 m/s2. The average peak ground acceleration figure for Auckland is 0.13.

The “moderate” earthquakes are defined as having a peak ground acceleration of one third of these figures and are one in 50 year events. In more commonly understood terms the Wellington and Auckland “moderate” earthquake can be roughly equated to earthquakes measuring 6 and 5 on the Modified Mercalli Intensity (MMI) scale1, or around 5.5-6 and 4.5-5 respectively, on the Richter scale. Earthquakes of these magnitudes are not destructive events. An MMI 6 event is associated with light building damage. A MMI 5 earthquake might break a few teacups.

What is an earthquake prone building? The earthquake prone building definition has two operative words. A building has to be likely to collapse in a moderate earthquake. Harrison wrote:

We know from the Christchurch and other New Zealand experiences that even unreinforced masonry buildings (which are almost all designated as earthquake prone) will generally stand up to some reasonably severe shaking. Very few collapsed in the first Christchurch earthquake, which was much more severe that the Christchurch measure of a “moderate” earthquake. If the earthquake prone designations were correct then we would have expected at least 75 percent to have collapsed. And if those buildings were resilient in Christchurch the same designs will be even more robust against the lesser quake standards in areas of low seismicity, and in particular in Auckland.

Why do the Ministry of Business, Innovation and Employment, and local authorities, believe there are so many earthquake prone buildings? They have been guided by a paper produced by a working group of the New Zealand Society of Earthquake Engineers, in June 2006, intended to make operational the Earthquake Prone Building requirements under the Building Act 2004 and the Building Regulations (Earthquake Prone Buildings) 2005.

The working group applied a more demanding test of building resilience than permitted under the legislation by using the phrase "loss of life could well occur as a result of the effects of earthquake shaking on the building" instead of "likely to collapse causing injury or death".

The standard has been moved from likely to collapse to “a long way” from collapse because, according to a member of the engineers group, "the point of collapse under earthquake is difficult, if not impossible to predict". This represents a change from a 75 percent probability to, say, a 1 or 2 percent probability.

The Ministry has given the engineers' working group tougher standard a form of official status by referring to it an accompanying letter to the discussion document that stated: “the NZSEE recommendations provide authoritative and timely information".

The Ministry-commissioned Martin Jenkins and Associates cost-benefit analysis of earthquake strengthening options showed that the costs of the proposals far exceed the benefits, with strengthening costs is $1.717-billion and the benefits only $37-million.

Harrison estimated the Auckland cost-benefit ratio to be 1762 to one and Dunedin’s to be 888 to one. Astoundingly, the ratio is 6209 to one for Whangarei. Under the proposals over a billion dollars will be almost entirely wasted strengthening buildings in these cities.

What would it take to make building strengthening worthwhile? Looking at the Wellington café, bar and restaurant sector in terms of units expressed in cups of lattes, "the required consumer surplus on per ‘latte’ basis would have to be as high as $100,000". Of course, a latte could never sell for $100,000, probably not even in Zimbabwe.

In light of the arbitrarily more severe test of earthquake proneness, and considering the costs of widespread earthquake strengthening out weigh the benefits by 1762 to one in Auckland, Harrison recommends that:

• The Ministry should publicly correct the false impression it has given that there are a large number of buildings that are likely to collapse in just a moderate earthquake.

• MBIE should go back to the drawing board and develop earthquake strengthening policies that are fair, which are based on sound analysis, and on the the considered views of the New Zealand public.

• Those territorial authorities should withdraw earthquake prone classifications that are not based on the legal definition of earthquake prone.

• If the Government decides to proceed with the proposals to fulfill a societal need to ‘do something’ after Christchurch then it should fund most of the strengthening work.

The Ministry of Business, Innovation and Employment's Building Seismic Performance Consultation document that was published in December may be read at http://www.dbh.govt.nz/consultingon-epbp-consultation-document.

Submissions on that document close on Friday.