Implementation of Equity in Resource Allocation for Regional Earthquake Risk Mitigation Using Two‐Stage Stochastic Programming

Mohammad R. Zolfaghari and Elnaz Peyghaleh

Risk Analysis, 2015, vol. 35, issue 3, 434-458

Abstract: This article presents a new methodology to implement the concept of equity in regional earthquake risk mitigation programs using an optimization framework. It presents a framework that could be used by decisionmakers (government and authorities) to structure budget allocation strategy toward different seismic risk mitigation measures, i.e., structural retrofitting for different building structural types in different locations and planning horizons. A two‐stage stochastic model is developed here to seek optimal mitigation measures based on minimizing mitigation expenditures, reconstruction expenditures, and especially large losses in highly seismically active countries. To consider fairness in the distribution of financial resources among different groups of people, the equity concept is incorporated using constraints in model formulation. These constraints limit inequity to the user‐defined level to achieve the equity‐efficiency tradeoff in the decision‐making process. To present practical application of the proposed model, it is applied to a pilot area in Tehran, the capital city of Iran. Building stocks, structural vulnerability functions, and regional seismic hazard characteristics are incorporated to compile a probabilistic seismic risk model for the pilot area. Results illustrate the variation of mitigation expenditures by location and structural type for buildings. These expenditures are sensitive to the amount of available budget and equity consideration for the constant risk aversion. Most significantly, equity is more easily achieved if the budget is unlimited. Conversely, increasing equity where the budget is limited decreases the efficiency. The risk‐return tradeoff, equity‐reconstruction expenditures tradeoff, and variation of per‐capita expected earthquake loss in different income classes are also presented.

Date: 2015
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Citations: View citations in EconPapers (12)

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https://doi.org/10.1111/risa.12321

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:35:y:2015:i:3:p:434-458

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