California wildfires could cost state $400B in economic losses
Insurance Information Institute's Michael Barry on the potential insurance implications of the California wildfires.
The deadliest, most destructive wildfires in California that burned for more than two weeks could end up costing the state about $400 billion, making it the most expensive natural disaster in the history of the U.S., according to a new report.
On Sunday, officials in California announced the fire – which killed at least 88 people (with more than 1,000 people still missing) – had been fully contained. It blazed across the state for 17 days before three straight days of rain helped firefighters to extinguish it.
“This is a huge economic loss and is made up of the total loss of value in property, values, taxes, lost jobs and wages, lost business and importantly by the significant health impacts of the particulate pollution resulting from the fires,” Joel Myers, the president of AccuWeather, said in a statement.
Smoke inhalation and pollution from the fires could also lead to ongoing health hazards, particularly for those who already suffer from respiratory illnesses or weakened immune systems, Myers noted. That could lead to deteriorating health, hospitalization or even premature death.
The cost to fight fires climbed to a record of at least $1 billion; never before has the California Department of Forestry allocated more than $773 million to do so.
Fires also set the stage for additional disruption to the California economy. Because they ravished the land, clearing it of vegetation, there’s an increased chance for more serious – and damaging – mudslides, which begin during the winter rainfall season.
“In fact, AccuWeather is predicting significantly more and larger mudslides than usual, which will cause more highways to be closed, impeding travel and causing further disruptions to the California economy,” Myers said.
It’s not just California that will suffer economically from the fires. AccuWeather estimated the total loss nationwide could rise to $350 billion. However, some states will be bolstered by a $50 billion net gain, because it’s likely that people currently living in the Golden State will move to neighboring states, causing a rise in real estate values, taxes collected and jobs in the states they move to.
Thousands were displaced by the fires, which eviscerated 14,000 properties and 153,000 acres. Recovery efforts are anticipated to last more than a week, and the death toll is also expected to rise to several hundred, according to AccuWeather.