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  • Ben Jones

The Economic Costs of Wildfires in California: Urgency of Early Detection

the economic costs of wildfires


In a world grappling with the growing impact of climate change, wildfires have emerged as one of the most destructive and costly natural disasters. As we witness an alarming increase in the intensity and frequency of wildfires, understanding their true economic ramifications becomes paramount. It is against this backdrop that we delve into a groundbreaking recently published report titled "The Economic, Fiscal, and Environmental Costs of Wildfires in California", authored by James Paci, Matthew Newman, and Tim Gage.

While previous studies have explored various aspects of wildfire costs, this report stands out as the first to leverage recent empirical research in order to provide a comprehensive assessment of wildfires' economic impact within the state. Drawing on recent empirical research, it presents a comprehensive analysis of wildfires' economic and fiscal impacts, spanning the critical years from 2017 to 2021.

The Economic Costs of California Wildfires

acres burned annually in California

Key findings

Wildfires in California come with significant economic, fiscal, and environmental costs. These include the costs of fighting the fires, the destruction of homes and infrastructure, the loss of life, the impact on air quality, and the environmental damage caused by the fires. The report estimates that the total cost of wildfires in California between 2017 and 2021 was $117.4 billion. These costs are likely to increase as climate change continues, leading to more frequent wildfires.

Wildfires have significant fiscal impacts on California. The largest impact is the loss in wage and salary income, which generates lower personal income tax revenue for the state. There is an estimated annual loss of $60.1 billion of income statewide over the 2017 – 2021 period.

This lost income would have been subject to an estimated marginal personal income tax rate of 6.0%, on average, across all affected households. Therefore, the state has likely lost an average of at least $3.6 billion in income tax revenue annually due to wildfires.

The growing intensity of the state’s wildfires has also been accompanied by large increases in state spending on fire suppression. Total funding for CalFire (across all agency programs) rose from less than $1 billion in the 2006-2007 fiscal year to nearly $3.9 billion in FY 2021-2022. These expenditures come from the state's CalFIRE "E-Fund".

Property damage

The report provides detailed information on property losses caused by wildfires in California. Over the period 2017 – 2021, CalFIRE estimated average annual "dollar damages" of roughly $9.9 billion annually (after adjusting dollar amounts reported for inflation), which translates to roughly $50 billion in property losses over the five-year period.

This amount includes all property destroyed or damaged during fires, regardless of ownership. Additionally, the report estimates that the state of California incurs roughly $277 million in property losses because of wildfires each year. These losses are a significant contributor to the total economic and fiscal costs of wildfires in California.

Response and clean-up costs

Despite the federal government covering approximately 75% of the expenses incurred by state and local authorities for disaster response, the State of California still accumulated a minimum of $1.13 billion annually in costs related to "emergency" wildfire response and the removal of debris over the past five fiscal years.

This figure excludes the "baseline" expenditures of various departments dedicated to wildfire suppression and monitoring, encompassing only those costs that directly fluctuate in response to the severity of wildfire activity in a given year. When factoring in federal response and debris cleanup expenses, the total estimated losses within this category amount to approximately $4.5 billion per year.

summary of direct losses from wildfires

Wildfire Detection - Every Minute Counts

Having forensically examined the various costs associated with wildfires, the report then moves on to consider what can be done to try to tackle this growing problem.

“The extent of these economic, fiscal and environmental costs likely justifies further public and philanthropic investment in preventing, detecting, monitoring, and suppressing wildfire ignitions.”

It mentions recent investments in detection technology across the state of California, including ALERTCalifornia, a program that utilizes a network of over 1,000 monitoring cameras with infrared capabilities. Additionally, the report notes that the usage of drones for wildfire control and mitigation has been successful, with CAL FIRE incorporating drone technology into their firefighting responses.

The report suggests that further investments in detection technology and response measures can help mitigate costs associated with wildfires and minimize the damage caused by them.

Consistent research findings indicate that when response times are minimized (i.e., the time between initial detection and the arrival of the first firefighting crew), it leads to decreased fire severity and a decreased likelihood of fires spreading beyond their initial containment. This, in turn, results in fewer acres burned, reduced smoke days, and mitigated fire-related consequences.

The report makes clear that early detection can truly be a gamechanger when it comes to wildfire mitigation. Some key research findings that the report draws upon include:

  • A one-hour reduction in response time would reduce the frequency of large fires by 16%.[1]

  • A one-hour increase in response time leads to a 29% increase in the probability that a given ignition burns more than 20 hectares.[2]

  • A delay in the average response time from 15 minutes to 65 minutes results in the likelihood of a “response failure” increasing 25%.[3]

  • An increase in response time from 15 minutes to 75 minutes increases the probability of a “containment failure” from 48% to 55%.[4]

comparing wildfire detection speeds


Supported by rigorous academic research, the case for early detection technologies becomes unequivocal. As wildfires continue to grow in destructiveness, it is imperative that we act swiftly to mitigate their impact. The escalating costs outlined in this report serve as a stark reminder of the urgency we face.

By investing in and implementing advanced early detection systems, we not only enhance our ability to combat wildfires effectively but also reduce the economic and environmental toll that these devastating events exact on our communities and ecosystems.

It is through proactive measures and continued research that we can hope to safeguard our future against the ever-growing threat of wildfires.


[1] Biddle et al.’s (2020) “Measuring the economic impact of early bushfire detection,” in Australian National University, Centre for Research and Methods;

[3] Arienti et al. (2006), “Empirical models of forest fire initial attack success probabilities,” Canadian Journal of Forest Research;

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