Friday, May 15, 2015
I had an Op-Ed in the May 14, 2015 New York Times. It summarizes the work I did in Canada on a benefit/cost analysis of the Moore Enhanced Building codes. The academic paper came out last month in Weather, Climate and Society and is co-authored with Greg Kopp at the University of Western Ontario and Paul Kovacs, Executive Director for the Institute for Catastrophic Loss Reduction. The Op-Ed can be found here.
Friday, April 3, 2015
In May 2013 two violent tornadoes roared through central Oklahoma. The first, struck Moore on May 20, the third time in 14 years the town experienced a violent tornado. An estimated $3 billion in damages resulted from that storm alone as well as causing 24 fatalities and hundreds of injuries. The most tragic result was the death of 7 children at Plaza Towers Elementary School. Tragedy can bring change as residents struggle with how to respond to such an event. For the city of Moore, it was time to consider revising their building codes raising the wind load standard from 90 to 135 mph. This change was designed to build homes that would remain essentially intact for all but the most extreme tornadoes thus lowering the cost to rebuild and perhaps providing a safer home for residents. It would be difficult to estimate the effect these code changes may have on casualties but a benefit/cost analysis can determine if the code changes will provide financial benefits to the community. This became the focus of my appointment as a Fulbright Scholar in Canada last year. I collaborated with Greg Kopp, a Wind Engineer at the University of Western Ontario and Paul Kovacs, the Executive Director of the Institute for Catastrophic Loss Reduction in Toronto to undertake a benefit/cost analysis of the recently adopted new building codes for Moore, OK. The paper is published by Weather, Climate and Society and can be found here.
To conduct the benefit/cost analysis, three pieces of information must be estimated. First, how much does the new code add to the cost of construction? Second, how much damage from future storms can be mitigated by the new code and finally, how much potential damage can be expected across the life of the structure? The first question was answered by the Moore Association of Home Builders and the engineering consultants hired by Moore. Their estimate is that implementation of the new codes will cost $1 per square foot.
A more challenging question is to provide an estimate of the reduction in damages that can be expected from the new code. The new code required roof rafters to be closer together, hurricane straps for the roof/wall connections, anchor bolts to tie the exterior walls to the foundation, better exterior sheathing and wind rated garage doors. While the code was designed for wind fields through EF-2, fully 70% of all tornado related damage comes from tornadoes rated EF-3 and above. But the rating given to a tornado refers to damage consistent with the highest wind detected within the path and does not reflect the wind field for the entire life or area of the tornado. So a home subjected to an EF-5 tornado may benefit from the new code since almost 90% of the wind field in an EF-5 tornado is EF-2 and less, on average. Once damage is examined by wind field, rather than tornado rating, 46% of the overall damage comes from wind fields that are EF-2 and less. Our estimate is that 65% of the EF-0 through EF-2 damage can be mitigated by the new code reducing overall tornado damage by 30%.
The final variable needed is an estimate of future tornado damage. Since the area of one city is small, it is better to make this estimate for an entire state. Oklahoma has experienced almost $32 billion in tornado damage from 1989-2012. The Oklahoma Department of Insurance reports that 65% of that damage is residential so an annual average of $832 million is our estimate of annualized residential damage in current dollars. Extrapolating that estimate across the 50 year life of the structure, adjusting for inflation, then discounting the estimate back to current dollars provides an estimate of almost $36 billion in expected residential losses from tornadoes for Oklahoma. If all homes were built to the new standard, a reduction in damage of $11 billion can be expected.
For the new code to be justified, the increased cost of construction must be less than $11 billion. To get an estimate of the overall cost of the new code, we need to know the average size of homes in Oklahoma and the current number of homes. Census and Zillow provide data indicating that the average sized home in Oklahoma is 2,000 square feet and there are currently 1.67 million homes. This means that if every home in the state had been built to the new code, the state would have increased construction cost by $3.3 billion. But this increased cost is lower than the estimate of reduced damages by a factor of more than 3 to 1. So the decision to change the building code in Moore appears to be a good decision and one that should be considered for adoption by the entire state of Oklahoma.
 Swiss RE, (2014), “Natural Catastrophes and Man Made Disasters in 2013”, Sigma, No. 1, 2013.
 Hampton, Joy (2014), “Moore city council considers storm-resistant building code upgrades, Norman Transcript, March 17, 2014. Available online at: http://www.normantranscript.com/headlines/x1387868847/Moore-City-council-considers-storm-resistant-building-code-upgrades?zc_p=0
 Ramsdell, J. V., and Rishel, J. P., (2007), Tornado climatology of the contiguous United States, Tech. Rep. NUREG/CR-4461, Nuclear Regulatory Commission, Washington, D. C.
 Estimate comes from state level data provided by the Oklahoma Department of Insurance and national data provided by the Insurance Information Institute.
 Estimate uses a 2% inflation rate and a discount rate of 2.5% based on the yield of the 10 year U.S. Treasury Notes.
 Census (2012), Selected Housing Characteristics, American Community Survey, 2012 5 year estimates, American Fact Finder, available online at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t