LA Wildfires Could Inflict $9B in Economic Damage to Region

The Los Angeles County wildfires that torched more than 16,000 homes, businesses and other buildings last month could burn a $9 billion hole in the region’s economy, according to a study.

The Los Angeles County Economic Development Corporation predicted the county could lose $4.6 billion to $8.9 billion in economic output from the Palisades and Eaton fires in the next five years, the Los Angeles Times reported.

Real estate and rental losses could reach $1 billion, while property damage could reach nearly $54 billion.

Federal, state and local governments are estimated to miss out on up to $1.4 billion in tax revenue from 2025 to 2029, depending on how long it takes to rebuild, according to the 68-page report.

“Speed matters in the recovery process, particularly from an economic perspective,” former state Gov. Gray Davis said during a Zoom press conference.

The faster fire-scarred areas are rebuilt, the quicker the economy will bounce back, Davis and county supervisor Kathryn Barger said. Both serve on the board of the Southern California Leadership Council, which commissioned the report.

“This report is clear in communicating that our strongest path forward is expediting the rebuilding of our homes, businesses and communities,” Barger told reporters.

The report analyzed three paths to recovery: a speedy rebound ending in 2028, matching an earthquake-model recovery timeline from the Federal Emergency Management Agency; a recovery ending in 2032; and one ending in 2034.

“Across all scenarios, the initial direct economic loss in the burned areas amounted to $1.26 billion of sales revenue (or 90 percent of baseline level) and about 8,200 jobs (or 85 percent of baseline employment)” for this year, according to the study.

Employment losses could reach up to 49,110 job years, or a person working full time for a year, based on recovery time, the study said. Labor losses could be from $1.9 billion to $3.7 billion.

The brunt of local economic damage would be borne by real estate and rentals, retail trade and professional and scientific technical services. The real estate and rental sector alone is expected to lose between $515.8 million and $1 billion, the study estimated.

Property damage to 20,218 land parcels within the burn area could be between $28 billion and $53.8 billion, depending on how long recovery lasts, the study said.

A Times analysis found that 13,338 land parcels affected by the fires were valued at $16.7 billion, after adjusting for damage to each structure as determined by the California Department of Forestry and Fire Protection.

— Dana Bartholomew