Wildfire losses and damage costs could reach up to $164 billion, UCLA report says
By Marissa Wenzke
LOS ANGELES, Calif. (KCAL/KCBS) - The two deadly wildfires that left widespread devastation after erupting on opposite ends of Los Angeles County last month have resulted in property losses and damage costs that may be as high as $164 billion, according to a recent UCLA report.
The report from the UCLA Anderson Forecast predicts a 0.48% loss in county-level GDP for 2025, amounting to about $4.6 billion, with total wage losses estimated to reach $297 million for businesses and workers in areas affected by the Palisades and Eaton fires. They left 29 people dead and completely destroyed more than 16,000 structures, burning down homes, churches, schools, grocery stores and other businesses and beloved landmarks in the hardest hit communities of Altadena and Pacific Palisades.
Economists warn some lingering impacts the region could face include an "increasingly unaffordable" LA housing market, particularly for rental units, while estimating total property and capital losses could range between $95 billion and $164 billion.
The report, authored by economists Zhiyun Li and William Yu, says fire mitigation investments should be made considering this impact and other "astronomical costs" tied to the wildfires.
"Without substantial and effective wildfire mitigation efforts and investments, Californians will face increasingly higher insurance premiums and growing health risks from wildfire-related pollution," the report states.
Describing last month's blazes as "the most catastrophic wildfires" in Los Angeles history, the report published Feb. 4 says some of its estimates and economic forecasts could change in the future since they take into account various factors and assumptions. It describes itself as providing "an initial assessment of the extensive losses and economic impact" of the Palisades and Eaton fires.
"In the coming months, we will be able to determine the direct insured losses through the total insurance claims summarized by the California Department of Insurance (CDI)," the report states. "Until then, we use data from past insured losses from California's most catastrophic wildfires to provide preliminary estimates for economic losses to insured homeowners."
Within the estimated losses reaching as much as $164 billion are forecasted insured losses of about $75 billion, the report says.
In estimating these losses, the report takes into account estimated home prices in the affected areas, current damage and destruction figures for the two fires and comparisons to total insurance claims from what the report describes as "the four most devastating wildfires in terms of economic loss in California's history prior to 2025."
Those fires, according to the UCLA report, include the Thomas and Tubbs fires in 2017 — which resulted in total insurance claims of $8.76 billion and $1.52 billion, respectively — and the Camp and Woolsey fires in 2018 which led to insurance claims of $8.26 billion and $1.42 billion.
The report also details potential impacts on home values as well as how state regulation responding to California's insurance crisis could also have an effect. The crisis has been blamed for unequal, sometimes starkly different roads to recovery for Los Angeles County residents who lost their homes in last month's fires.
More than 100,000 homeowners in the LA area were dropped by their insurers before the Palisades and Eaton fires.
"Properties exposed to natural disasters like wildfires are likely to decrease in value due to reduced demand and increased insurance premiums, compared to similar properties that are not at risk," the UCLA report says.
But the report also lists health-related impacts that could result in more economic costs, saying the wildfires "released substantial amounts of carbon and air pollutants" which could harm the health of local communities by exposing them to "harmful chemicals, including carcinogens and metals such as lead and arsenic," leading to increased hospital and emergency room visits.
The full report can be viewed here.
