How Wildfires Affect the US Economy
Wildfires are uncontrolled fires that burn in natural areas like woods, shrublands, or grasslands. Wildfires are growing more destructive due to several reasons, including a longer average dry season, hotter weather that enhances susceptibility, early melting of winter snowpack, and shifting climatic patterns because of climate change.
From the 1970s to the 2000s, the yearly average area burned in large forest fires rose by roughly 1200 percent across the western United States. Since 1960, three of the top five years for burned acreage in the US have been since 2015. In 2020, more than 10 million acres were burned by nearly 59,000 uncontrolled wildfires in the United States. This is the second-highest acreage of land burned in a single year since 1960, and it demonstrates the growing spread of wildfires across the country.
Wildfires happen more frequently in eastern states than in western states, but fires in the east are typically minor compared to fires in the west. Over 33,000 fires destroyed about 700,000 acres in the east in 2020, while nearly 26,000 wildfires burnt about 9.5 million acres in western states. Wildfires dominate on federal lands because they comprise much of the land in the west, and the federal government plays a crucial role in managing this land. In 2020, federal land accounted for more than 70 percent of the total area scorched by wildfires in the United States.
One of the most severe consequences of wildfires is property loss and damage. Fires in the United States cost $14.8 billion in property damage in 2019. The most destructive wildfires can cost well over a $1 billion in property loss and damage. The costliest wildfire in US history, the Camp Fire in 2018, resulted in about $10 billion in damage. Eight of the 10 most costly wildfires in US history have occurred in the last four years.
Property damage forces individuals and families from their homes. It also results in the devastation of businesses and substantial financial consequences for insurers. Interestingly, fire suppression operations create job possibilities, and local employment and salaries may grow after severe wildfires. On the other hand, wildfires tend to make local labor markets less stable over time because they produce sizable seasonal employment inequalities.
In 2019, the outdoor recreation industry in the United States was valued at about $460 billion, accounting for 2.1 percent of the national GDP. Due to wildfires, tourists and outdoor enthusiasts tend to avoid state and national parks, negatively affecting hospitality, restaurant, transportation, and other industries.
According to a study published in the Proceedings of the National Academy of Sciences (PNAS) in 2021, wildfire smoke introduces microscopic particles into the air across the United States, with even higher concentrations on the West Coast. Poor air quality can lead to low productivity, increased asthma attacks, and long-term health effects, particularly for those who work in the open air.
According to a study, wildfire smoke eliminated about 1.5 percent of annual income gained from labor in the United States from 2006 to 2015, or about 0.04 percent for each day of exposure over two years. The study further noted that each year of smoke exposure could result in cumulative annual earnings losses of up to $92.9 billion.
