**1. Introduction**

As one of the most devastating natural events, earthquakes impose economic challenges on communities and governments. The number of human and economic assets at risk is growing as megacities and urban areas develop all over the world. This increasing risk has been plotted in the damage and loss reports after the great earthquakes.

The 1975 Tangshan (China) earthquake killed about 200,000 people. The 1994 Northridge, (USA) earthquake left 57 dead and about 8,700 injured. The country experienced around \$42 billion in losses due to it. The 1995 earthquake in Kobe (Japan) caused about 6,000 fatalities and over \$120 Billion in economic loss. The August 1996 Izmit (Turkey) earthquake killed 20,000 people and caused \$12 billion in economic loss. The 1999 Chi-chi (Taiwan) earthquake caused an estimated \$8 billion in loss. The 2006 Gujarat (India) earthquake saw around 18,000 fatalities and 330,000 demolished buildings [1]. The Sichuan (China) earthquake, on May 12th 2008 left 88,000 people dead or missing and nearly 400,000 injured. That earthquake damaged or destroyed millions of homes, leaving five million homeless. It also caused extensive damage to basic infrastructure, including schools, hospitals, roads and water systems. The event cost around \$29 billion in direct loss alone [2]. The devastating earthquake of March 2011 with its resulting tsunami along the east coast of Japan is known to be the world's most costly earthquake. The World Bank estimated the cost at \$235 billion while government estimates reported the number at \$305 billion. The event left 8,700 dead and more than 13,000 missing [3].

As has been shown, earthquake events have not only inflicted human and physical damage, they have also been able to cause considerable economic conflict in vulnerable cities and regions. The importance of the economic issues and the consequences of earthquakes attracted the attention of engineers and provided new research and working opportunities

© 2012 Kalantari, licensee InTech. This is an open access chapter distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2012 Kalantari, licensee InTech. This is a paper distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

for engineers, who up until then had been concerned only with risk reduction options through engineering strategies [4].

Seismic Risk of Structures and Earthquake Economic Issues 5

Physical effects Economic effects

Disruption of business due to damage to industrial plants and equipment Loss of productive work force, through fatalities, injuries and

relief efforts Disruption of communications

networks

relief

Cost of response and

Losses borne by the insurance industry, weakening the

insurance market and

Losses of markets and trade opportunities,

increasing the premiums

Ground deformation and loss of ground

structural damage to

buildings and infrastructure Non-structural damage to buildings and infrastructure (e.g., component

damage)

Considering the results of each step as a conditional event following the previous step and all of the parameters as independent random parameters, the process can be expressed in terms of a triple integral, as shown below, which is an application of the total probability

Reduction of the seismic capacity of damaged structure which are not repaired Progressive deterioration of damaged buildings and infrastructure which are not repaired

quality Collapse and

Structural analysis, which gives the Engineering Demand Parameters (EDPs) required

Damage analysis, which compares the EDPs with the Damage Measure in order to

Loss Analysis, which evaluates the occurrence of Decision Variables (DVs) due to

for damage analysis,

failures.

Primary effects (Direct or first-order)

Secondary effects (indirect or higher-

order)

decide for the failure of the facility, and;

effects

Fatalities Injuries

Social or human

Loss of income or employment opportunities Homelessness

Disease or permanent

Psychological impact

Bereavement, shock Loss of social cohesion due to disruption of community

Political unrest when government response

is perceived as inadequate

**Table 1.** Effects from Earthquakes [8]

theorem [11]:

disability

of injury,

Seismic loss estimation is an expertise provided by earthquake engineering and the manner in which it can be employed in the processes of assessing seismic loss and managing the financial and economical risk associated with earthquakes through more beneficial retrofit methods will be discussed. The methodology provides a useful tool for comparing different engineering alternatives from a seismic-risk-point of view based on a Performance Based Earthquake Engineering (PBEE) framework [5]. Next, an outline of the regional economic models employed for the assessment of earthquakes' impact on economies will be briefly introduced.
