Course:EOSC311/2022/Shaking up the Real Estate Market: The Impact of Plate Tectonics on the Real Estate Industry

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Summary

This project will evaluate what tectonic plates are, what the consequences of plate movements are, and how these consequences impact the real estate industry. I will provide a review of what we have learned in EOSC 311 regarding plate tectonics, focusing on information regarding physical shifts that have consequences that impact land and development. I will evaluate how these processes impact the real estate industry, through zoning laws, building codes, retrofitting, earthquake insurance, and tsunami zones that take these processes into consideration, in order to minimize the risk of damage that movement in tectonic plates poses to real estate.

Statement of Connection

Geophysics is at the core of human experience. Geological structure dictates where humans can develop on this Earth, and often forms the backbone of our decision making process in such development. In this course, we spent Module 1 learning about how geology, and specifically as relates to this project, plate tectonics, impacts society as a whole. Geological processes, like plate tectonics, must be studied and understood so as to best guide human occupation of our planet. This project will evaluate how the geological structure of plate tectonics impacts real estate. I will also be evaluating various ways that these processes guide the real estate industry, through regulations like building codes. I am particularly interested in researching this topic so I can best understand how and why decisions are made to best manage real estate from a geological perspective.

Main text

Section 1: Tectonic Plates

What are tectonic plates?

Map of Global Tectonic Plates
Tectonic Plate Boundary Type Graphic

Tectonic plates are what compose Earth's outermost layer, the lithosphere. They are massive plates of rock that lie on top of the asthenosphere, a molten layer or rock. The Earth is divided up into seven main tectonic plates, the North American Plate, Eurasian Plate, the Pacific Plate, the African Plate, the Australian Plate, the South American Plate, and the Antarctic Plate, and many other secondary plates[1]. These plates have boundaries that interact with one another in three main ways: divergent, convergent and transform[2]. These movements, or plate interactions, are why we have geological features. Divergent boundaries are when plates are moving away from one another, creating mid oceanic ridges. Convergent boundaries are when plates are pushing into one another, creating subduction zones that create volcanoes and mountains. Transform boundaries are when plates slide across one another, building tension from plates getting stuck together, which is eventually released and the plates break loose, causing a the Earth's crust to shake. This process of movement is called an earthquake. Convection in the Earth's mantel also causes these plates to slowly move, at a pace of roughly 15 centimetres a year, as a result of the rising of hot rock and sinking of cool rock .[3]

Graphic depicting tectonic plate movements

Plate Tectonics Impact on Land

It doesn’t take a rocket scientist to conclude that shifts in these massive plates have significant impacts on the surrounding land, but what exactly do these impacts look like? As we previously established, tectonic plates are giant slabs of rock that glide over the Earth’s mantle. These plates are at the foundation of the Earth’s surface, and therefore directly impact the geological structure of all that lies above them. Additionally, these plates are in a state of motion, and when large shifts occur, significant physical consequences can result. When earthquakes occur following large tectonic plate movements, the stability of infrastructure, more specifically the stability real estate, is threatened. Additionally, we can observe that movement in lithospheric plates reduces the area size of livable land [4]. While the movement isn't necessarily significant, roughly lost in 50 years, this decrease can be catastrophic for developments in close proximity to shorelines. When tectonic plates crash into each other at convergent boundaries, the surrounding area is not only at risk of earthquake damage, but tsunami damage as well. Tsunamis are large and powerful waves caused by movement in tectonic plates [5]. These large waves can pose a significant threat to neighbouring real estate.

Section 2: Impact on Real Estate

Building Codes

Debris following the devastating 2010 Haiti earthquake

As we have previously established, shifts in plate tectonics results in earthquakes, sea level rise, and even tsunamis. Unsurprisingly, these processes have consequences for the surrounding land developments. We’ve seen earthquakes wipe out the infrastructure of entire countries as a result of municipalities developed without consideration for these natural processes. In 2010, upwards of 100,000 buildings were destroyed in Haiti’s massive 7.2 earthquake, as a result of the country not enforcing building codes that require structures to withstand the impact of shifts in plate tectonics[6]. There is a common saying "earthquakes don't kill people, building do" . This is particularly important to keep in mind in the real estate industry because while we cannot control geological processes, we can commit to understanding the processes so as to best guide building codes and other critical real estate decisions that ultimately dictate the impacts of earthquakes. Building codes are "sets of regulations governing the design, construction, alteration and maintenance of structures. They specify the minimum requirements to adequately safeguard the health, safety and welfare of building occupants." For example, in the 1970s, Utah began requiring the use of reinforced steel in masonry construction in order to reduce the earthquake risk of significant damage that is posed by unreinforced masonry[7]. Similarly in San Fransisco, another earthquake prone area, buildings are required to meet certain specifications for masonry bonding and distance between headers, and also must pass in-place shear tests[8]. This was a direct consequence of a devastating earthquake that levelled the city in 1906. Prior to that, building codes existed, but there were none that considered the effects of seismic activity. The revision of these building codes can be credited for the minimal structural damage in ensuing earthquakes in California. These requirements are an excellent method for managing geological processes, and minimizing the negative consequences of earthquakes on real estate.

Retrofitting

Retrofitting is the process of updating or changing the physical structure of a building in order to increase the safety and durability of the structure. This process is particularly relevant with consideration of geological processes and real estate, in that as we continue to research and understand earthquakes and their impacts on buildings, we develop new and updated building codes. However, older structures that were built prior to this research and knowledge obviously cannot comply with the updated codes and standards. In order to solve this issue, the building can be retrofitted in order to further support the structure. In Los Angeles, a city along the San Andres Fault Line, upwards of 200,000 buildings have been retrofitted to best withstand earthquakes, resulting in a significant reduction in damages and deaths following significant earthquakes[9].

Zoning

Zoning is the process of legally allocating what specific land zones can be used for in development purposes. Zoning dictates what types of buildings can be built (size, number of stories, etc), and how these building types can be used (commercial, residential, agricultural, etc)[10]. In the state of California, the State Mining and Geology Board is responsible for zoning appropriately wide earthquake fault zones that encompass all current and potentially current active areas of the San Andreas, Calaveras, Hayward, and San Jacinto Faults, all of which "constitute a potential hazard to structures from surface faulting or fault creep"[11]. Creating these geological zones can then guide municipally governed land in their planning, zoning and building regulations, and therefore reduce the risk of damage posed by geological processes, and preserve the integrity and lifespan of real estate developments.

Earthquake Insurance

While building codes, retrofitting, and land zoning are all helpful processes to mitigate damages they can not stop an earthquake from happening. Acknowledging that natural disasters will happen can help citizens take the best steps to be prepared when they do. One important way to do that is by covering properties with earthquake insurance. Earthquake insurance covers some of the losses and damage that earthquakes can cause to your home, belongings, and other buildings on your property[12]. Most homeowners and renters insurance policies do not cover damages caused by earthquakes. The destructive potential of these events can leave people with nothing, taking away not only their homes and basic necessities, but also their emotional person items. Earthquake insurance can cover the cost of a destroyed dwelling, personal property, and temporary living expenses while the primary dwelling can not be used. Buildings that are not retrofitted are still eligible for earthquake insurance, but they are often charged higher premiums and deductibles. After a natural disaster, government assistance is not always provided or everyone and is typically difficult to access. Citizens should not wait until disaster strikes to protect themselves, earthquake insurance is an easy way to mitigate damage from an unavoidable event. Understanding the geological processes that your area is prone to (earthquakes along areas surrounding fault lines, homes on gradients that are subject to slope failures, etc) is important in understanding the real estate value and risks of the area.

Tsunami Zones

House Destroyed following the 2011 Tsunami in Japan

The danger of an earthquake does not end when the shaking stops. Shifting tectonic plates in the ocean can cause large tidal waves, known as tsunamis, to form. Tsunamis can be extremely destructive to real estate that is close to the ocean. A recent example was the 2011 earthquake and tsunami in Japan. After a 9.0 earthquake, waves up to 132 feet crashed into the island. The disaster killed over 15,500 people and left around 450,000 people without homes. The damages to housing and infrastructure were some of the greatest in modern history. It is estimated that the damages and losses totalled nearly $300 billion[13]. After a variety of tsunamis along the Pacific Northwestern coast in the mid to late 1900s, tsunami preparedness was brought more into the spotlight. Areas at risk of tsunami damage are in what is referred to as a tsunami zone. California, Oregon and Washington State all require hazard mitigation to be included in their general land use planning processes, in addition to requiring conformance with building codes for damage mitigation requirements[14]. Understanding how geological processes lead to tsunamis, and having a basis for what and when to expect when these processes occur, can help guide real estate decisions to help best limit damage when they do occur.

Conclusion

To conclude, the tectonic plates, and their interactions with one another through convergent, divergent and transform boundaries are deeply influential in the real estate industry. The geological process of plate movements results in physical shifts that have consequences that impact land and development. These processes impact the real estate industry significantly through building codes, retrofitting, zoning laws, earthquake insurance, and tsunami zones that are guided by an understanding of the impacts of plate movements. It is important to continue to research and deeply understand these processes so as to best continue to manage real estate and inform real estate decisions moving forward. Understanding how and why these plates move the way that they do is essential for those in careers in the real estate industry.

References

  1. California Earthquake Authority (08/31/2020). "Understanding Plate Tectonic Theory". Check date values in: |date= (help)
  2. Earth How (05/11/2022). "Plate Tectonic Types: Divergent, Convergent and Transform Plates". Check date values in: |date= (help)
  3. "Plate Tectonics". National Geographic. May 19, 2022.
  4. Maciuk, Kamil (2021). "What is the Impact of Tectonic Plate Movement on Country Size? A Long Term Forecast". Remote Sensing. 13: 8.
  5. "What is a Tsunami?". NASA Science Space Place.
  6. Associated Press (08/15/2021). "Why Are Earthquakes So Devastating in Haiti?". Retrieved 06/21/2022. Check date values in: |access-date=, |date= (help)
  7. FEMA. "Seismic Building Codes". United States Government. Retrieved 06/21/2022. Check date values in: |access-date= (help)
  8. Sparks, Dana (12/11/2018). "About the California Building Codes & Earthquakes". Check date values in: |date= (help)
  9. Construct Update (12/27/2021). "What is Retrofitting". Check date values in: |date= (help)
  10. Property Metrics (03/06/2017). "A Practical Guide to Understanding Zoning Laws". Check date values in: |date= (help)
  11. California State Mining and Geology Board (2022). "Alquist-Priolo Earthquake Fualt Zoning Act Statutes" (PDF).
  12. Lara, Ricardo. "Earthquake Insurance". California Department of Insurance. Retrieved 06/22/2022. Check date values in: |access-date= (help)
  13. "5 Worst Tsunamis in Modern History". The Borgen Project. Retrieved 06/22/2022. Check date values in: |access-date= (help)
  14. "Designing for Tsunamis: Seven Principles for Planning and Designing for Tsunami Hazards" (PDF). Weather.gov. March 2001.


Earth from space, hurricane.jpg
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