A cost-benefit analysis for the appraisal of social and market prices in the probabilistic seismic risk assessment of building portfolios: A methodology for the evaluation of disaster risk reduction programs

A cost-benefit analysis can be a milestone for the probabilistic seismic risk assessment of building portfolios. This approach appraises social, economic, and technical aspects as evaluation criteria, becoming a reliable method for more accurate feasibility evaluation of Disaster Risk Reduction (DRR) programs. This paper proposes a simplified methodological approach to estimate the feasibility of intervention campaigns directed to seismic retrofitting for building portfolios. Its feature is the number of variables it encompasses such as: multiple intervention levels, resource distribution, maximum repair time, direct and indirect losses, simplified seismic resilience, number of casualties, amount of replacement buildings, and expected service life. Then, all these factors are analyzed using a conventional probabilistic seismic risk assessment, followed by the estimation of net cash flows in terms of social and market prices. The final profitability and feasibility are determined based on investment indicators (Net Present Value, Internal Rate of Return, and Cost-Benefit ratio). In addition, plots of maximum repair time and simplified seismic resilience (as a function of the resource distribution) are proposed as novel decision-making tools. To illustrate the methodology, a case study of six building portfolios grouped into two categories is presented. The portfolios are conformed by a Peruvian school typology designated as 780-PRE, typically two-story high with reinforced concrete moment-resisting frames plus infill-walls and confined masonry walls. The demonstrative case included eleven target scenarios to assess the as-built and several intervention conditions, based on incremental seismic retrofitting measures. Results confirm that social prices influence the decision-making process, even making feasible projects that were initially unfeasible (when solely appraised under market prices). Finally, the authors propose further applications of this methodology as a tool to support the development of reliable DRR-programs.