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Open-File Report 2008–1222

Geographic Analysis and Monitoring Program

Potential Effects of a Scenario Earthquake on the Economy of Southern California: Small Business Exposure and Sensitivity Analysis to a Magnitude 7.8 Earthquake

By Benson C. Sherrouse, David J. Hester, and Anne M. Wein

Abstract

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The Multi-Hazards Demonstration Project (MHDP) is a collaboration between the U.S. Geological Survey (USGS) and various partners from the public and private sectors and academia, meant to improve Southern California’s resiliency to natural hazards (Jones and others, 2007). In support of the MHDP objectives, the ShakeOut Scenario was developed. It describes a magnitude 7.8 (M7.8) earthquake along the southernmost 300 kilometers (200 miles) of the San Andreas Fault, identified by geoscientists as a plausible event that will cause moderate to strong shaking over much of the eight-county (Imperial, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura) Southern California region. This report contains an exposure and sensitivity analysis of small businesses in terms of labor and employment statistics. Exposure is measured as the absolute counts of labor market variables anticipated to experience each level of Instrumental Intensity (a proxy measure of damage). Sensitivity is the percentage of the exposure of each business establishment size category to each Instrumental Intensity level. The analysis concerns the direct effect of the earthquake on small businesses.

The analysis is inspired by the Bureau of Labor Statistics (BLS) report that analyzed the labor market losses (exposure) of a M6.9 earthquake on the Hayward fault by overlaying geocoded labor market data on Instrumental Intensity values. The method used here is influenced by the ZIP-code-level data provided by the California Employment Development Department (CA EDD), which requires the assignment of Instrumental Intensities to ZIP codes. The ZIP-code-level labor market data includes the number of business establishments, employees, and quarterly payroll categorized by business establishment size.

Version 1.0

Posted September 2008

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Suggested citation:

Sherrouse, Benson C., Hester, David J., and Wein, Anne M., 2008, Potential effects of a scenario earthquake on the economy of Southern California—Small business exposure and sensitivity analysis to a magnitude 7.8 earthquake: U.S. Geological Survey Open-File Report 2008–1222, 11 p.



Contents

Introduction

Small Business Definition

Data Sources

Data Suppression

ZIP Code Reconciliation

Methodology

Estimates of Small Business Exposure and Sensitivity

Discussion

References

Appendix. Modified Mercalli Intensity (MMI) Scale Descriptions


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