Business Losses, Transportation Damage and the Northridge Earthquake

The January 17, 1994 Northridge Earthquake damaged four major freeways in the Los Angeles area, creating the prospect of gridlock in the nation's prototypical automobile city. This paper examines the effect of the transportation damage on business activity. Using survey responses from 559 firms in the Los Angeles area, this paper gives information on the extent and magnitude of the business losses that can be attributed to the transportation disruptions. Despite the fact that the freeway damage was repaired exceptionally quickly, 43% of the firms that reported any earthquake loss stated that some portion of that loss was due to transportation damage. For the firms that attributed some loss to transportation damage, the average response was that 39% of their earthquake-related business losses were due to the disruptions in the transportation system. Comparing information on these and other survey responses yields several policy recommendations, which are summarized at the end of the paper.

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