Property damage from the January wildfires in Los Angeles County, including the Eaton and Palisades fires, is estimated at between $28 billion to $53.8 billion, according to a report published Thursday.
The report commissioned by the Southern California Leadership Council and the LA County Economic Development Corporation studies a broad range of economic impacts of two of the most destructive wildfires on record in California. The report examines destruction and economic loss caused by the fires and offers data-driven recommendations to guide recovery efforts.
Some key findings from the report:
- The fires could lead to up to $3.7 billion in labor income reductions.
- Federal, state and local governments could see tax revenue losses ranging from $730 million to $1.4 billion.
- Business disruptions are projected to result in economic losses of up to $8.9 billion in Los Angeles County over the next five years.
The report takes into account the economic damage and personal toll of the fires and explores investments in prevention and recovery, former California Gov. Gray Davis, SCLC co-chair, said during an online news conference.
“Speed matters in the recovery process… particularly from an economic perspective,” Davis said. “Job No. 1 is to help people rebuild and get back to their new homes.
“We have to learn the lessons of this fire and previous fires. We have to build homes better… so we don’t repeat this terrible tragedy. Let’s learn the lessons.”
The study examined how the fires are projected to impact key industries. Retail trade, health care, professional services, construction, and educational services were among the hardest hit, according to the study.
Disruptions to supply chains and workforce displacement could compound the region’s economic challenges, the report said.
Stephen Cheung, president and chief executive of LAEDC, said a best-case scenario would be recovery by 2029, but the process could take many more years. The impact of the fires would grow with the length of the recovery period, he added.
Steps towards recovery, according to the report, include fast-tracking rebuilding efforts through coordinated permitting processes and financial incentives can reduce recovery timelines by up to 50%, strengthening fire-prone communities with improved emergency response systems, microgrids and fire-resistant construction materials and methods, as required in California’s current building codes.
Also, implementing alternative insurance models, such as parametric insurance, can ensure faster financial relief for affected businesses and homeowners. Parametric insurance pays a set amount based on the magnitude of the event, rather than the magnitude of the losses in a traditional indemnity policy.
Researchers further suggest direct support be provided to impacted businesses and displaced workers through grants, training programs, and small business recovery initiatives to prevent long-term economic decline, the report says.
According to the report, establishing multi-agency wildfire task forces with clear recovery roadmaps can also cut response times and improve post-disaster efficiency.
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