Approaches and challenges in estimating economic loss from tsunami damage models

Constance Ting Chua , Yushi Miki, Anawat Suppasri, Susanna F Jenkins, David Lallemant, Fumihiko Imamura, Adam D. Switzer

Tsunami damage assessment as a field has been steadily gaining momentum in the scientific community, and one of the most common ways in which damage has been quantified is by fragility functions. However, how tsunami damage models can be applied to practical disaster risk management is still relatively underexplored. An important aspect of disaster risk management is loss estimations. Loss estimations do not only assist the development of risk maps, risk reduction policies and measures, they also inform decisions on loss compensations from public and private institutions such as the insurance and reinsurance sectors. Tsunami loss estimations usually require the definition of a relation between damage and loss. Different approaches of relating damage to loss and computing losses result in varied loss models. Moreover, most damage and loss models are developed for buildings, with few to no models being developed for non-building structures along the coast. The heterogeneous nature of coastal infrastructure also introduces additional layer of complexity in translating damage to loss. This chapter aims to review the current approaches taken to quantify tsunami damage and loss as well as the challenges in developing loss estimation models. We identify 22 existing tsunami loss modelling studies and propose a structured taxonomy of vulnerability approaches, showing that tsunami loss modelling remains far less developed than for other perils. Our review highlights major sources of uncertainty across hazard, exposure, fragility and loss modules. We find substantial gaps in modelling non-building coastal infrastructure and in accounting for indirect losses such as business interruption and supply-chain impacts. We underscore the need for probabilistic, multi-hazard and time-dependent methods to enhance the reliability of tsunami loss estimation and support the development of tsunami-specific risk financing tools.