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Major quake disaster in Southern California could cause $300 billion in losses

  • Experts say Southern California is overdue for a big quake along the feared San Andreas Fault, which could cause widespread damage to L.A. and nearby communities.
  • If the "Big One" damaged the L.A.-area port complex, it would be a supply-chain nightmare to businesses, since the port handles a huge share of the nation's cargo.
  • An earthquake disaster could cut off a major water supply for Southern California and bring tsunamis to coastal areas.

Mexico City's earthquake disaster is a reminder of the serious risk of Southern California's "Big One" striking at any time and causing widespread damage that some estimate could approach upwards of $300 billion.

Experts say Southern California is long overdue for a major earthquake along the 800-mile San Andreas Fault, which could cause extensive damage and loss of life to the nation's second-largest city and the region. It also could be a supply-chain nightmare to U.S. businesses, since the L.A./Long Beach port complex handles more than 30 percent of loaded containers that move through all U.S. ports.

"As a state, California is probably one of the better-prepared places on Earth in terms of preparation for earthquakes," said Mary Comerio, past president of the Earthquake Engineering Research Institute and a University of California-Berkeley professor specializing in disaster recovery and reconstruction. "That said, financially these things are huge hits now."

Overpass that collapsed on Highway 10 in the Northridge/Reseda area at the epicenter of the earthquake in 1994.
Visions of America | UIG | Getty Images
Overpass that collapsed on Highway 10 in the Northridge/Reseda area at the epicenter of the earthquake in 1994.

Mexico City's 7.1-magnitude quake on Sept. 21 toppled buildings, damaged public infrastructure and killed more than 220 people. It was four times stronger than the 6.7-magnitude Northridge earthquake in 1994, a Los Angeles-area disaster along a previously undetected fault that took more than 60 lives and caused about $44 billion in damage.

"The Northridge earthquake was considered to be moderate," said Robert de Groot, a staff scientist with the U.S. Geological Survey field office in Pasadena, California. "For California, our big earthquakes are typically in the high magnitude 7s."

According to the USGS scientist, a 180-mile rupture along the southern portion of the state's San Andreas Fault could produce the "Big One," a 7.8-magnitude earthquake. He said it would be felt "pretty widely throughout the state" and even as far as Las Vegas but "the worst shaking will be in the Los Angeles basin."

"We are expecting a very large earthquake on the San Andreas Fault," de Groot said. "We don't know when this earthquake will take place, but it's a very good candidate as a place where a big earthquake will happen eventually."

San Andreas Fault line
Craig Aurness | Corbis | VCG | Getty Images
San Andreas Fault line

A spokesperson for AIR Worldwide told CNBC the catastrophe-modeling firm conducted an earthquake model analysis and found simulated events impacting California could result in "upwards of $300 billion in total ground-up losses to properties."

An analysis by CoreLogic, a global data analytics firm, specifically looked at a large quake along the San Andreas Fault and in November estimated it could impact the northern and southern portions of California simultaneously. CoreLogic said an earthquake of magnitude 8.3 along the feared fault could result in a full rupture and damage up to 3.5 million homes, resulting in reconstruction cost values of $289 billion.

By comparison, CoreLogic estimated Hurricane Irma and Harvey damage would run in the tens of billions of dollars. Most of the property estimated to be damaged by flood is uninsured.

In California, only about 10 percent of the homeowners have earthquake insurance.

On average, big quakes happen on segments of the San Andreas statewide roughly every 150 years, but parts of the fault system in the south near L.A. have not had a rupture for over 300 years.

For Southern California, a significant quake could damage infrastructure at the ports as well as airports. That could result in a ripple effect not only on the state's economy but on the nation's since major retailers, manufacturers and others rely on the L.A.-area ports to stay in business.

Additionally, rail lines that carry the goods from ports, as well as the highways and bridges that the trucks use, could suffer devastating damage in a big quake and take weeks or months to repair.

"We could be up and running here after a major quake and have all of our ships coming in and going, but there could be a problem with rail or highways that doesn't allow the goods to leave the port or get to the port," said Phillip Sanfield, a spokesman for the Port of Los Angeles, the nation's largest port complex.

Parts of the cargo terminals and harbor facilities of the L.A.-area port complex are built on artificial landfills and areas with known seismic activity. As the ports have increased volumes and cargo ship sizes over the years, they have outgrown existing spaces and been forced to create new land.

The shaking on areas with land reclamation increases the liquefaction potential and ground failure when loose or water-saturated soils shake. Indeed, the huge 9.0-magnitude earthquake in Japan in 2011 caused major liquefaction on reclaimed land in Tokyo.

"We're very cognizant of the fact that we're in an earthquake-prone region," said Duane Kenagy, interim deputy executive director of the Port of Long Beach. He said standards have been developed over the years for the engineering and construction of the port facilities that take into consideration the location and seismic risk.

If there was damage from a significant quake to the L.A. port complex, though, they could attempt to move ships to other terminals or even divert vessels to other West Coast ports, such as Oakland.

Other infrastructure also is at risk, and an earthquake could have lasting effects.

There's the potential for natural gas and water lines to break, which is what happened during the Northridge quake. The broken gas lines could create thousands of fires that could overwhelm emergency responders after a major temblor.

Another frightening possibility is an earthquake could cut off a major water supply for L.A. and other parts of Southern California, where more than 23 million people live. The region gets about 70 percent of its water delivered through three aqueducts that cross the San Andreas Fault, and a study by the L.A. Mayor's Office several years ago revealed that a 7.8-magnitude quake could cripple that water supply for 15 months.

There's also concern about the stability of levees in Northern California that form the Sacramento-San Joaquin Delta, the hub of the state water system that provides water to about 25 million Californians and to millions of acres of agriculture in the Central Valley. San Francisco Bay and Silicon Valley areas of the state also could be affected since they draw on that water from the delta.

The Metropolitan Water District of Southern California, a water wholesaler for nearly 19 million people, uses the Colorado River Aqueduct and said it could recover in six months from a disruption if there's a big quake on the southern portion of the San Andreas fault. Chief Engineer Gordon Johnson said MWD has a reservoir it built in the late 1990s that carries a six-month emergency supply of water for Southern California and there are also groundwater basins to tap into during a water emergency.

Finally, a major earthquake in California could trigger tsunamis and makes heavily populated areas along the coast especially vulnerable. The threat of a tsunami isn't limited to the southern half of the state since Northern California includes part of the 680-mile long Cascadia fault capable of megaquakes of magnitude 9.0.

WATCH: 7.1 magnitude earthquake hits Mexico