**1.1. The economic consequences of earthquakes**

The economic consequences of earthquakes may occur both before and after the seismic event itself [6]. However, the focus of this chapter will be on those which occur after earthquakes. The consequences and effects of earthquakes may be classified in terms of their primary or direct effects and their secondary or indirect effects. The indirect effects are sometimes referred to by economists as higher-order effects. The primary (direct) effects of an earthquake appear immediately after it as social and physical damage. The secondary (indirect) effects take into account the system-wide impact of flow losses through interindustry relationships and economic sectors. For example, where damage occurs to a bridge then its inability to serve to passing vehicles is considered a primary or direct loss, while if the flow of the row material to a manufacturing plant in another area is interrupted due to the inability of passing traffic to cross the bridge, the loss due to the business's interruption in this plant is called secondary or indirect loss. A higher-order effect is another term as an alternative to indirect or secondary effects which has been proposed by economists [7]. These potential effects of earthquakes may be categorized as: "social or human", "physical" and "economic" effects. This is summarized in Table 1 [8].

The term 'total impact' accordingly refers to the summation of direct (first-order effects) and indirect losses (higher-order effects). Various economic frameworks have been introduced to assess the higher-order effects of an earthquake.

With a three-sector hypothesis of an economy, it may be demonstrated in terms of a breakdown as three sectors: the primary sector as raw materials, the secondary sector as manufacturing and the tertiary sector as services. The interaction of these sectors after suffering seismic loss and the relative effects on each other requires study through proper economic models.
