How Local are the Local Economic Impacts of Wildfires?
This working paper examines the local economic impacts of wildfires in the western United States, using two empirical approaches that investigate just how local these impacts are.
Abstract
As large and damaging wildfires have increased in frequency in the western United States, the consequences of these events for local economies remain largely unknown. Studies of the effects of natural disasters on local economic growth have yielded mixed results, and few have examined wildfires—especially large and damaging wildfires. We investigate the local economic impacts of wildfires in the western United States using two empirical approaches, which rely on public county-level economic data and administrative-establishment-level data, respectively. Comparing findings with these two data sources allows us to investigate how local the local economic effects of wildfires are. We find no significant short- or long-run effects of major wildfires on county-level employment growth. However, when we analyze results closer to the actual fire locations, we find that job growth in the year of the fire declines by 1.3 percentage points, but rebounds after that with no significant long-run effect. When analyzed by industry, both approaches show a boost in employment growth in the construction sector, but the results for other sectors have some important differences.
