The day after a 7.3 magnitude earthquake rocked Fukushima, Japan, which is still recovering from a 9.0 magnitude quake in 2011, the Conference Board of Canada released a report that warns Canada’s economy could suffer catastrophic damage should Vancouver ever be hit with a magnitude 9.0 quake.
According to economic modelling, thousands of buildings in Vancouver wouldn’t be the only things that would collapse; so too would insurance companies and the resulting “contagion” would cause insolvencies in the financial sector and many industries.
The report was funded by the Insurance Bureau of Canada.
Modelling tested the ability of Canada’s economy to absorb the financial shocks of a major earthquake and concluded: “Canada is not prepared to deal with the macroeconomic and fiscal consequences of a massive earthquake.”
According to the report, a worst case scenario could result in 43,700 jobs lost over 10 years and a total of $127.5 billion in economic losses Canada-wide.
“At the industry’s current levels of capitalization, Canada is not prepared to deal with the macroeconomic and fiscal consequences of a large earthquake,” Pedro Antunes, deputy chief economist for the Conference Board, said in a press release.
“It is important for Canadians, businesses and government leaders to understand that the current regulatory regime may not be able to protect our economy from a major disaster.”
Since insurance companies would fail, “taxpayers would have to absorb the costs of losses to both public assets and infrastructure, as well as uninsured private losses,” the report states.
A magnitude 9.0 earthquake like the one that devastated Fukushima in 2011 is the upper limit on the Richter scale. It results in total devastation.
Natural Resources Canada predicts the likelihood of a major earthquake hitting the B.C. coast in the next 50 years at 30%.
The report recommends that governments strengthen building codes to make buildings and infrastructure more earthquake resistant.
“While we cannot prevent earthquakes from happening, clearly, much can be done to mitigate the physical damage that an earthquake will inflict on Canadians, such as strengthening building codes.”
