Economic Toll of Los Angeles Fires Goes Far Beyond Destroyed Homes

The ongoing disaster will affect residents’ health, local industries, public budgets and the cost of housing for years to come.

After decades of mounting damage from climate-fueled natural disasters, researchers have compiled many misery-filled data sets that trace the economic fallout over weeks, months and years.

The fires still burning in Los Angeles are sure to rank among America’s most expensive — but there is no perfect analogue for them, making it difficult to forecast the ultimate cost.

The main reason is that wildfires have typically burned in more rural locations, consuming fewer structures and attacking smaller metropolitan areas. The Los Angeles conflagration is more akin to a storm that hits a major coastal city, like Houston or New Orleans, causing major disruption for millions of people and businesses.

“It looks a lot more like the humanitarian situation from a flood or a hurricane than a wildfire that people are watching in the hills,” said Amir Jina, an assistant professor at the University of Chicago’s Harris School of Public Policy, who has studied the economic impact of climate change.

On the other hand, several mitigating factors could lead to lower costs and a stronger rebound relative to other places. The cinema capital’s wealth and industrial diversity, along with other natural advantages from geography and weather, may allow Los Angeles to stave off a worst-case scenario.

Estimating the likely economic losses is tricky at this stage. The weather data company AccuWeather has offered a figure of $250 billion to $275 billion, though a Goldman Sachs report said it found the estimate high. (Declining to provide a breakdown because its methodology is “proprietary,” AccuWeather said it considered many factors including long-run health impacts as well as short-term losses in the value of public companies exposed to the disaster.)