Burning Holes in the Pocket-Wildfire Economics

Photo by Vladyslav Dukhin

Introduction

Wildfires provide a plethora of dangers across the landscape. Quite often, these hazards can be visually seen. However, there remains secondary hazards and issues that are not often seen but can cause similar or additional damages, resulting in short and long-term impacts. One of these “hidden hazards” comes in the form of economic impacts. Wildfires are destructive throughout the vegetation and forests but can also drain banks, federal funding, and physical resources while producing environmental and physical hazards. Families, businesses, and the environment all fall victim to the economic loss’s of wildfires. Throughout this piece, the economic impacts of wildfires will be examined further and the exact causes of those expenditures will be reviewed.

Business Insider: Yosemite National Park Tourism Loss

Wildfires Burning Money

Wildfires create economic damages across the landscape, regardless of the size of the fire. Several variables contribute to the amount of money and resources used including the intensity of the fire, the size of the fire, the items burned such as landscape versus infrastructure, and manpower and resources required to prevent and fight the fire directly. According to Oregon State University, the National Forest Service spends an average of nine percent of funding on each suppression of a wildfire in the county that it ignited from. With several active burning fires across hundreds of counties throughout the western United States, that nine percent can quickly exponentiate in number and create funding issues. A study conducted by the LOA, as illustrated below, indicates the majority of the larger wildfires have ignited since the 1990’s. Coupled with the largest fires, the most destructive fire have also increased within the same time period. These results can be contributed to several factors including anthropogenic causes, climate change, and natural causes due to more frequent extreme weather events. However, the final result remains that each large and destructive fire will require more money and resources to battle. For example, in 2003, San Diego County suffered $147.3 million dollars in infrastructure damage due to wildfires. This resulted in the loss of 400 miles of wire and transformers, as well as 3,200 active utility poles.

Legislative Analysis Office Frequency of Destructive Wildfire

According to Climate Central, California is the leading state in wildfire costs during the 2000’s decade. Compared to all western states, California burned significantly less acreage than other states. However, state level economy, high standard of living, and other variables created a drained budget for California across the 2003-2012 timeframe. California peaked during the 2008 season burning around 1.8 million acres, creating a $1.1 billion deficient. The graphs include the costs associated with fire prevention, fighting, utilities and infrastructure burned, manpower and live saving equipment, and all other resources mandated to suppress these fires.

Climate Central California & Western Fire Comparison

Climate Expenditures

Although wildfire frequency is rising on average by the decade, the cost of fighting these battles continues to skyrocket annually. With a more expensive price tag on resources and equipment, the cost of California wildfires has surpassed all states across the western United States. According to the California Department of Forestry and Fire Protection, the average cost by decade to fight wildfires has increased by more than $375 million. As noted previously, significant wildfires have trended upward since the 1990’s. While noting that increasing trend, wildfire costs have increased by more than $175 million from the 1990’s to the 2000’s. In addition to the cost of wildfires, study was created on the wildfire risk and housing market across Colorado Springs, Colorado in 2000. Although different from California, wildfires have a significant impact on the landscape and same sectors in Colorado, but to a different effect. As of 2005, no insurance company within the Colorado Springs region offered fire insurance due to wildfires. This study produced the result that homebuyers are more likely to buy a home without dense vegetation due to the wildfire prone growth throughout that region. Although no long-term effects are noted from the study and stabilized housing markets maintained their trend, small variations can be seen immediately after a fire is disposed of and suppressed.

California Wildfire Costs by Decade

While the overall cost of wildfires continues to increase annually and by the decade, the public and private lands are effected equally as impacts don’t provide their own border. Private lands have been identified and measured for wildfire preventative actions. The following chart, created by Headwaters Economics, illustrates the sections of funding for federal lands from 2002-2012. The greatest cost across these lands are to no surprise, fire preparedness. However, fire suppression is a close second due to the amount of fires and burned acreage throughout the landscape. Since 1960, six of the worst fire seasons have occurred since 2000. With emergency funds and fuel reduction placed in the middle ground, site rehabilitation is the lowest budgeted portion of this chart. That is partially due to the remaining budget after the fires have been prepared for and taken place, but also due to the ability to recover burned land. Often, land that has been charred too much is unable to be remediated and requires a natural process compared to man made actions and policies. Budgets can be underestimated or overestimated on a seasonal basis. However, the impacts of the local economy can play a factor into how much change is observed where wildfires break out annually.

Wildfires can alter different levels of economic efforts from local shops and store to federal emergency funds. Wildfire season can vary depending on several natural factors, and this can be seen within the YouTube video above. With such a seasonal trend, impacts to local businesses can lead to rising and falling profits. Infrastructure that is cut off from society, for example roadways, cause transportation impacts and travel issues for those who don’t have several locations for their businesses. These impacts can be felt in rural or urban regions. Due to the increasing fire and acreage burned, the Forest Service now accounts for more than 50% of their budget strictly for wildfire prevention. The Department of Interior now accounts 10% of their annual budget for wildfire prevention for additional funding. From 2002-2012, the emergency funds were used commonly as budgets were blown apart with increasing and more destructive fires becoming more frequent. However, these trends, statistics, and barriers didn’t stop at 2012. The past several years have also seen an uptick in damaging fires, such as 2021 which devastated California and other parts of the intermountain west region.

Wildfire Protection of Federal Lands 2002-2012

2021 Wildfire Economics

The National Oceanic and Atmospheric Administration (NOAA) has released it’s map of the 2021 billion dollar disasters. With a strong pile of evidence related to increasing fire frequency, acreage burned, and rising costs, 2021 was dominated by wildfires across the western United States. California in particular struggled greatly, but other states including Colorado, Washington, Oregon, Montana, and Idaho saw extreme damages as well. Arizona noted a few larger wildfires, but lacked fires in comparison to the previous states. Although hundreds of smaller fires ignited during 2021, wildfires led the list of billion dollar disasters with six. No other weather disaster surpassed four events, with the exception being severe weather outbreaks. According to Climate.gov, more than $10.6 billion dollars in damages occurred across the western states due to wildfires in 2021. The Dixie Fire in California burned 960,000 acres along, destroying over 1,000 structures. Air quality was a concern for much of the region across several states for an extended period of time. Ash and burned debris were reportedly falling from the sky due to the burned landscape and strong upper level winds transporting this debris to locations unrelated to the burning fire.

NOAA 2021 United States Billion Dollar Disasters

Behind Texas, Louisiana, and Florida, California saw the fourth most costliest weather disasters in 2021 primarily driven by wildfires. 7.1 million acres of land burned nationally in 2021, with California receiving the most damage. Idaho saw the costliest fire season since 1980 using $750 million dollar to battle blazes. Washington tied 2017 and 2020 as the two previously costly fire seasons. With the exception of Hurricane Ida and the Texas winter storm, wildfire season was the costliest national weather disaster in 2021.

2021 Billion Dollar Disasters by State

Wildfire Infrastructure Economics

With wildfires raging havoc on the environment and local regions, the economy can quickly take a downward turn. However, short-term and long-term impacts can remain, as highlighted by the Headwaters Economic display of data below. Suppression, infrastructure, and evacuation make up nearly 35% of the short-term cost damages. However, 65% of the remaining costs are long-term impacts with secondary problem that may not appear for years to come. These issues include ecosystem devastation, business losses, and damaged or destroyed infrastructure. According to a study completed by Resources for the Future, or RFF, 18,000 structures were destroyed by wildfires in 2020, 54% of those being homes. In 2018, homes and businesses of California sustained $28 million dollars in damage. Although these structures can be rebuilt in the short-term, the ability to regain the money lost during that timeframe is unlikely. Furthermore, physical and mental damages placed on these individuals are certain to have long-term effects. These losses may lead to an increase in homelessness which can in turn relate to a lack of labor, which made up $70 billion dollars in California from 2006-2015. Even with the statistics that have been placed upon these damages, there is almost no possible value to place on the long-term impacts of the economy from natural and physical devastation. Economic damages and impacts are likely to worsen as the future presents itself, with larger and more unfathomable values possible.

Short-Term and Long-Term Wildfire Impacts

Conclusion

In summary, wildfires effect several sectors across the globe including international parties. However, each related sector and impact are directly related to the economy. With multiple avenues of economic impacts, wildfires can quickly become a bank draining event that produce a strain on other branches. With lack of money and physical resources, other regions that require aid and assistance will lack those actions and suppression techniques. Therefore, wildfire economics can have an impact on all governmental scales including local, state, and federal levels. Impacts from these fires can alter the ability to suppress the fires, fire management, fire response, manpower and resources, and change the land and humanitarian uses across a local or widespread region. Such radical changes throughout these regions may quickly change the way life is presented and lived for generations to come.

Looking Ahead

While reviewing several aspects of wildfires and their impacts to the environment and society, the next blog post will feature information and data based upon wildfire impacts on human health. Similar to the environmental impacts, there are positives and negatives to human health that don’t initially come to mind. However, the negative impacts can be damaging with a long duration of complications. Most would assume that air quality and respiratory issues are the singular health impact, other attributes including mental health, injuries and deaths, and organ damage. While articulating this data and communicating this information, human health can be neglected during a wildfire but is simply as important as the direct environmental impacts itself.

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