Initial estimates of economic loss for Christchurch are probably too low, says a Massey University business professor. Photo / Sarah Ivey
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Christchurch's economy will emerge stronger from the earthquake, just like San Francisco Bay did after its 1989 quake, a business professor at Massey University says.
Pro vice-chancellor Lawrence Rose, who was on the seven floor of the San Jose State University business tower in San Francisco when the quake hit,
said Christchurch people should be confident about their future.
"The devastation across the San Francisco Bay area was vast, leaving 63 people dead. Additionally 3757 were hurt, transportation, infrastructure and public services were severally damaged as bridges and highways collapsed, gas mains burst and fires raged. It was estimated 12,000 houses and 2600 businesses were affected.
"[But] after four days most public services were restored in the bay area and restoration of city centres progressed quickly."
Rose said damage in the bay area was put at US$9 billion at the time - equivalent to $17 billion today - and the United States Government signed a US$3.45 billion relief package.
Rose said it was reassuring to see the New Zealand Government had also acted quickly to provide a recovery package but people needed to be patient.
"While national and local governments seem to doing all the right things at the moment, everyone in New Zealand will have to be patient. While much of the visible damage was repaired in the bay area reasonably quickly, it took 11 years for all the region's transportation infrastructure to be fully restored."
Rose said more than half of the US$9 billion cost was attributed to business disruption at US$5 billion.
"San Francisco newspapers reported that an estimated 25 per cent of their smaller companies would most likely close permanently. Additionally, firms trading in the San Francisco Bay area experienced negative impact on their stock market returns immediately after the earthquake while those operating in other parts of California were unaffected."
Rose said he suspected the initial estimates of economic loss from Christchurch earthquake were too low by half because significant costs like relocation were being overlooked.
"Relocation cost is the loss of productivity from the temporary shutdown of businesses or their relocation until their original locations can be rebuilt. For example, a longer commute by workers when their workplace is relocated from the central city would result in lost time at work and increased petrol costs."
Rose said any concern over the lack of insurance for business and home owners should be resolved quickly.
"The temporary worry about the lack of insurance for business and home owners in Christchurch should be resolved quickly as representatives from the banking and insurance industries will quickly realise there is money on the table."
