The damage caused by wildfires can be devastating, eroding structures and displacing people who live and work in the area. And researchers say the smoke from the annual fires is also causing economic damage to areas never hit by the flames.
In addition to the toll that wildfire can take on the health of people in the affected areas, there are infrastructure and operating costs, experts said.
Expenses paid by homeowners to improve or expand measures to protect their properties and the impact of smoke on livelihoods and budgets can be significant.
Wildfires that burned thousands of square miles across the American West last year cut power, destroyed homes and buildings, and forced evacuations.
Fires in Oregon and Colorado have damaged or destroyed more than 10,000 buildings. Five of the six largest wildfires in California history occurred in 2020.
At the fires, there was smoke that left Western communities submerged in a gray and orange haze that blotted out the air and kept the normally hot midday temperatures in some areas at a cool nighttime level.
Outside the immediate vicinity
Plumes of smoke from wildfire – and their economic impact – could extend well beyond the fires, said Eric Zou, assistant professor of economics at the University of Oregon.
“When considering the health and labor impact of wildfires, it is important to think beyond the areas in the immediate vicinity of the fires,” Zou said.
The European Union's Copernicus Atmosphere Monitoring Service reported in September that smoke from wildfires in the western US traveled nearly 5,000 miles to Britain and other parts of Northern Europe.
Zou co-wrote a paper on the economic effects of wildfires with economists Mark Borgschulte and David Molitor of the University of Illinois that was presented at a January 2020 conference of the American Economic Association. Molitor said there is a quantifiable economic relationship to the amount of smoke reaching communities.
"We estimate that an additional day of smoke exposure reduces revenues by about 0.04% over two years," said Molitor. "The effect is greatest in the year of exposure to smoke, but the effects can last up to two years after exposure."
Benjamin Jones, assistant professor of economics at the University of New Mexico, said researchers are only beginning to understand how wildfire smoke affects local economies.
"It is certainly possible, perhaps even probable, that the economic effects of wildfire exposure to smoke could last for months or even years after a major smoking event," he said.
Jones said exposure to smoke that harms workers' health "can affect job performance, labor market productivity, and maybe even wages and retirement savings," Jones said.
Prolonged and intense fires, like the one in the Pacific Northwest last year, can affect people's health “ in such a significant way that there are long-term effects on the local economies long after the wildfire that caused the smoke has died down & # 39; & # 39; said Jones.
Two of the most visible industries affected by wildfire smoke are tourism and outdoor recreation. Jones quoted calculations from the U.S. Bureau of Economic Analysis which found that the economy of outdoor recreation accounted for $ 459.8 billion in 2019, or 2.1% of the national gross domestic product, which is the sum of all goods and services. services produced within a country's borders.
"People tend to avoid national and state parks when wildfire smoke is present, which can negatively impact the local lodging, hospitality, and outdoor recreation industries, especially in rural areas in the American West," Jones said.
A study published last October by the Urban Land Institute, a global organization of real estate and land use experts, found that real estate development is on the rise in areas already prone to forest fires, with results for urban centers including displaced persons and smoking damage.
The survey found that developers, urban planners, and public leaders are "increasingly coordinating resilience efforts on location, district and regional scale," said Elizabeth Foster, manager of the institute's Urban Resilience program, in an email.
Developers face particular economic risks, including power outages that cause business interruptions and construction delays, dangerous air quality and additional costs such as advanced air filtration technology.
"For many major markets, wildfire smoke is expected to be an increasing concern as climate change increases the number of days that wildfires burn," Foster said.
Developers have included construction engineering and design as methods of fighting wildfire smoke, Foster said.
Strategies to maintain indoor air quality include high performance air filters, passive house design principles to reduce unfiltered air infiltration, use certified air purifiers, install sensors to provide real-time air quality feedback, and regular maintenance of ventilation and HVAC systems , ”Said Foster.
The potential benefits of wildfire-resistant development and infrastructure management for the real estate industry include tenant protection, loss prevention, improved property values and lower insurance premiums, Foster said.
“Structures built to building codes built on wildfires survive faster, depending on the characteristics and severity of the wildfire,” said Foster.
Some developers said homebuyers increasingly expect wildfire risks to be taken into account for the homes they are considering buying, "so wildfire-resistant development could be a competitive advantage," Foster said.
Jones said he could envision a growing market for “smoke avoidance investments,” such as better insulated homes and improved air filtration and purification systems for new homes, or as investments by current owners.
Economists know that people are taking steps to prevent and reduce their exposure to air pollution, such as wildfire smoke, and so it seems likely that home developers and potential and current homeowners will not be immune to these trends for the specific case of wildfire smoke, Jones said.
Calculations by Western communities and entrepreneurs need to take into account not only fires, but also the resulting smoke. As Jones said, the season of wildfires is getting longer and "smoke is here to stay" in the West.
"The potential economic consequences here can be quite significant," said Jones.
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