California’s 2018 wildfires caused $150 billion in damages

Irvine, Calif. — In 2018, California wildfires caused economic losses of nearly $150 billion, or about 0.7 percent of the gross domestic product of the entire United States that year, and a considerable fraction of those costs affected people far from the fires and even outside of the Golden State.

For a study published today in Nature Sustainability, researchers at the University of California, Irvine, China’s Tsinghua University and other institutions combined physical, epidemiological and economic models to gain a more comprehensive understanding of the impact of the blazes. More than 8,500 separate fires burned 1.9 million acres, making them the deadliest and most destructive in any year in California history.

Tallying the damage, the team found that direct capital impact (burned buildings and homes) accounted for $27.7 billion, 19 percent of the total; $32.2 billion, 22 percent of the whole, came from health effects of air pollution; and $88.6 billion in losses, 59 percent, was indirectly caused by the disruption of economic supply chains, including impediments to transportation and labor.

“When insurance companies, policy makers and even the media assess damage from California’s wildfires, they focus on loss of life and direct destruction of physical infrastructure, which, while important, are not the whole picture,” said co-author Steve Davis, UCI professor of Earth system science. “We tried to take a more holistic approach for this project by including a number of other factors such as the ill effects on the health of people living far away and the disruption of supply chains.”

Climate change, land and fire management, population and economic growth, and increasing community encroachment in the wildland-urban interface have combined to increase the frequency and severity of wildfires in the Western United States over the past few decades, culminating in enormously damaging blazes in 2017, 2018 and 2020.

As the fires burned, satellite images showed trails of smoke spanning large areas of California, causing hazardous breathing conditions for residents of communities hundreds of miles from the burning fires.

Power transmission was affected by the fires, as was freight transport by rail and trucks, pipeline operations and many other business and infrastructure-dependent activities. The study showed that the majority of economic impacts were felt by industries and locations also far from the actual fires, and that nearly one-third of the total losses were outside of California.

“The broader impacts of these climate-driven wildfires are not only bigger than prior studies have estimated, but also more widely dispersed – including sizable impacts outside of the state,” said lead author Dabo Guan, a Tsinghua University professor of Earth system science who is also a University College London researcher.

Davis said he hopes the study can help policy makers and fire managers make more sound decisions in the future about land and forest management, development patterns and fire suppression efforts. For example, the larger estimated costs may justify larger and different allocations of resources to fire prevention and suppression.

In particular, the authors suggest that disaster response teams may wish to focus “fire prevention efforts on areas typically upwind of major population centers or near important industrial or transportation infrastructure.”

This study, which was supported by the U.S. National Science Foundation and China’s National Science Foundation, included researchers from China’s Shanghai University of Finance and Economics and Norwegian University of Science and Technology.