Cost of increased fault risk unknown
Scientists now estimate there is a 75 per cent chance of the Alpine Fault rupturing within the next 47 years, but Treasury has yet to attempt to assess what the economic consequences could be.
Academics have dramatically increased their assessment of the likelihood of a big quake on the fault by 2068, which studies had previously put at 30 per cent.
New research led by Wellington University senior lecturer Jamie Howarth and involving Otago University, GNS Science, the University of California and the United States Geological Survey also calculated about an 82 per cent chance the next rupture of the fault would be magnitude 8 or higher.
A Treasury spokesman said it didn’t have any current or recent work on the possible economic or financial implications of a rupture of the Alpine Fault. However, he said some of the work it did in 2018 on ‘‘a fiscal stress test’’ for a major Wellington earthquake would be applicable.
That exercise suggested a severe earthquake in Wellington could cost the Government $65 billion, directly and indirectly, and result in core Crown debt rising by 13 per cent of GDP within five years. It also suggested a $44b cumulative hit to GDP.
Howarth said not much work had been done on the economic consequences of an Alpine Fault earthquake, but he expected that would now change.
‘‘We are just starting to get into that space.’’
Infometrics economist Brad Olsen said it would be an ‘‘enormously consequential event for the economy’’ even though there might be parts of the country that would be relatively unscathed.
In the short term, the biggest impact could be on the country’s distribution networks and a rebuild would occupy a big chunk of the construction industry, he said. ‘‘We could have significant infrastructural issues across the country and possible loss of life and disruption to the movement of people and goods.’’