Adaptive Migration in the Face of Wildfires: Financial Impacts and the Role of Government Aid

• In Event: Climate Shocks and the Reallocation of Households and Housing

Abstract

Natural disasters are expected to impact a large and increasing number of people with climate change. Adaptive migration – movement from risky to safe areas – is theorized to be a key strategy for minimizing the costs of natural disasters. This paper investigates how people migrate in response to wildfires in California, where fires have become more frequent and severe. I provide novel empirical estimates of the extent of adaptive migration, evaluate the financial consequences of these disasters, and identify the causal impact of receipt of government disaster aid on migration, immediately after the wildfire and in the longer-term, beyond the initial forced displacement. Using detailed individual-level geographic data, I estimate the effect of wildfires on migration using a difference-in-differences (DID) event study design by comparing the migration behavior before and after a fire of individuals in blocks that are burned for the first time with that of those in never-burned blocks within a census tract. I find that an individual experiencing a first fire has a persistently higher probability of out-migration even after seven years after the fire. There is also evidence of adaptive migration: Those who experience a fire are more likely to be in wildfire-safe areas, even amongst individuals who are low credit. There are lasting, financial consequences for individuals who experience a fire, as they change their consumption with high-credit individuals being less likely to be homeowners and low-credit individuals having fewer auto loans compared to their counterparts that lived in blocks that never burned. Leveraging a new instrument for aid receipt – taking advantage of the fact that politically competitive counties are more likely to receive aid – I find that government aid is associated with higher migration, albeit not to wildfire-safe areas. Overall, migration is occurring, but adaptive responses are small. Moreover, government aid could be redesigned to improve the level of migration out of risky areas.

Author

• Victoria Wang, Wellesley College
  Presenting Author