Estimating the benefits of construction measures to mitigate earthquake risks in Iran

Despite significant developments in technical aspects of construction measures in buildings to reduce earthquake risks, their widespread implementation in many communities has not occurred. One important factor is the additional cost of construction. The adoption of construction measures depends upon the utility households derive in relation to their costs. In this study we develop a subjective expected utility model of the household's decision process; and also employ a contingent valuation survey to assess the value to households of construction safety features in houses in Tehran and Rasht, Iran. The literature suggests that there are factors which detract from household expenditure to self-insurance, especially in mitigating earthquake risk. However, the results of this study show that, under certain conditions, households are willing to pay a significant premium to ensure that earthquake safety construction features are incorporated into housing design.