November 6, 2003
Quake affected most area businesses
Ninety percent of the businesses in the central Puget Sound region that responded to an online and telephone survey suffered damage or other adverse impacts from the 2001 Nisqually earthquake, according to a report prepared by UW researchers for the departments of emergency management in Pierce and King counties.
“It was basically a situation of a lot of businesses having small impacts and a very few getting clobbered,” said William Beyers, a UW professor who studies economic geography. He conducted the survey with colleague Stephanie Chang, a research assistant professor of geography who looks at the effects of natural disasters.
The research, funded by U.S. Economic Development Administration, also indicated that 25 percent of the businesses closed following the 6.8 magnitude earthquake, which rocked Western Washington on Feb. 28, 2001. The vast majority of business closings were for one day or less. However, four firms reported being closed for more than a week, principally because of transportation disruptions. Of these, one was shut down for eight weeks and a second was closed for 10 weeks.
The overwhelming number of the 175 respondents from King, Pierce, Snohomish and Kitsap counties who completed the survey anonymously, identified themselves as small businesses, although one firm with 10,000 employees did participate. The survey did not attempt to put a dollar figure on quake-related business losses.
The report also found that:
- Overwhelmingly, business closures were caused by loss of telecommunications or utilities.
- Most earthquake-related costs were absorbed by businesses without assistance from agencies such as the Federal Emergency Management Agency or through earthquake insurance.
- Employees checking for earthquake-related problems at home were an important factor in business closures. These closures generally only lasted for several hours.
- About 25 percent of the firms reported revenue losses because of the earthquake, but most made up these deficits later.
- Just 16 percent of businesses reported transportation-related impacts. But the research tested new models that can be used to predict the economic effects of transportation disruptions in Puget Sound and other regions around the United States.
- In the Information Age, not as many businesses utilize the Internet as might be expected. The researchers collected far more responses to the survey by first making telephone calls or sending letters to businesses than they did from recruiting participants online.
In some respects, the findings mirror those from an earlier study by Beyers and Chang on the household effects of the Nisqually quake. That study found that nearly one in four Puget Sound households suffered damage, that damage generally was not serious and that few families changed their earthquake preparedness after the temblor.
“Most businesses claimed to have taken some form of pre-quake preparedness. Mostly it was low level, such as having bottled water on hand or backing up data. They did nothing structural,” said Beyers. “This is similar to findings in our earlier household survey. The attitude of businesses and households seems to be, ‘If you are not hurt, why go out and spend money’? Most businesses didn’t have significant damage and saw no reason to make changes such as getting earthquake insurance.”
Beyers also will report on his findings Nov. 19 at the North American Regional Science Meeting in Philadelphia.