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Most building owners and occupiers would need to take professional advice to
understand the risks and costs of risk mitigation, and to determine the optimal
strategy e.g. using the services of structural engineers and insurance brokers.
Determining a building’s vulnerability to earthquake damage requires a
specialised assessment that takes account of, not only the size of potential
earthquakes, but also soil conditions, building height, building materials and
construction methods, and design considerations relating to the ‘regularity’ of
the building.
1.4 Government responses
The market response may be judged inadequate in a number of respects.
Information, research and analysis relating to earthquake hazards
Information, research and analysis have the essential qualities of public
goods. Specifically, they are non-rival goods, which is to say that their use by
one member of the community does not diminish the amount of the good that
is available to other members of the community. It may be efficient for
governments to pay for the production of such goods and arrange for their
distribution at the marginal cost of dissemination. The latter is generally close
to zero which may mean that such information should be free.
GA has the primary responsibility for providing these public goods, which is
apparent from the ‘hazard mapping’ activities that are described in section 1.1.
Setting standards for earthquake protection
In the absence of government intervention, the amount of earthquake
protection is decided by building owners and occupiers, but subject to (a)
advice from the engineering profession, (b) standards of professional conduct
preventing engineers from being involved in the design and construction of
unsafe buildings, and (c) the pricing of resultant risks by insurance providers.
The potential weaknesses in this decision-making arrangement are as follows:
• It is unsafe to assume that building owners and occupiers will
generally acquire the information they need to make a sound decision,
or even to know that they should consult an expert;
• Many decisions would be made by owners and builders while risks of
injury or death are unknowingly borne by tenants and their employees;
• Professional self-regulation would not be fully transparent and may
tend towards the lowest common denominator, particularly during long
periods of seismic tranquillity; and
• Some decisions are of a public policy kind, that is, where the
community would regard the government as accountable, not the
engineering profession. For example:
o Some buildings need to not only survive an earthquake but also
remain functional. Hospitals are obvious examples. Their
destruction has the potential to greatly compound the danger to
the public in the wake of an earthquake.
o The destruction of ‘buildings of assembly’, such as schools and
theatres, present a similar threat of enhanced danger to the
public, simply on account of the number of occupants.
ABCB Regulation Impact Statement (RIS 2007-03)
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