After the Fire: Economic and Institutional Responses to Wildfires

Session Submission Type: Panel

Abstract

Natural disasters are increasing in frequency and severity as climate change intensifies environmental risk. Wildfires, in particular, have expanded in exposure and damage, threatening human societies, local economies, community resilience, and public finance while imposing substantial burdens on affected households and governments. In response, local, state, and federal institutions must adapt their fiscal systems, administrative practices, and recovery policies. This panel brings together four empirical studies that examine how wildfire shocks reshape housing markets, local economic activity, disaster aid administration, and property tax burdens. Taken together, the papers highlight the economic and institutional consequences of wildfires across multiple sectors and offer policy-relevant insights for building more resilient and equitable recovery systems.
Wildfires can destroy substantial shares of local housing stock and rebuilding is often slow. As a result, fire-affected and exposed areas may face tighter housing supply and upward pressure on prices. The first paper examines how wildfire destruction affects housing supply elasticity and property values. The results show that property values increase after wildfire events when housing losses interact with inelastic supply. The findings have important implications for housing affordability, land-use regulation, and wildfire mitigation policy in exposed communities.
Beyond physical destruction, wildfires also disrupt local economic activities during the immediate response period and the longer-term recovery process, with broader consequences for community resilience. The second paper studies the short- and long-run economic consequences of major wildfire events in California counties. Combining multiple datasets on wildfire intensity and sectoral economic activity, the paper uses a synthetic control framework to estimate how affected communities deviate from their fire-free trajectories. The results document immediate and persistent economic disruptions, with implications for recovery investments, resilience planning, and the design of mitigation programs.
In response to damage on local economies and communities, the federal government plays a central role in providing post-fire disaster assistance for relief and recovery. The third paper focuses on the administration of federal disaster assistance post-wildfire, examining FEMA’s Individuals and Households Program and disparities across multiple stages of program implementation. The analysis shows how aid application and eligibility patterns correlate with individual- and community-level socioeconomic and racial characteristics. The findings demonstrate how inequalities in disaster aid can emerge through administrative processes, providing broader lessons about equity in program design and implementation.
Local governments are also on the front lines of wildfire recovery, particularly through the implementation of relief policies and the management of public finance. This is particularly important for property tax, which is the primary revenue source for many local governments. The fourth paper examines how wildfires reshape the distribution of property tax burdens across homeowners in California, with particular attention to the state’s distinctive institutional setting. Wildfires can alter local tax bases by damaging housing stock and disrupting housing markets, while also increasing demands for public spending during recovery. The paper suggests how wildfire shocks interact with these institutions to produce uneven tax consequences across households, with direct relevance for post-disaster recovery policy and property tax equity.

Policy Area

• Natural Resource, Energy, and Environmental Policy

Chair

• Lily Hsueh, Arizona State University

Discussants

• Lily Hsueh, Arizona State University

• Elizabeth Baldwin, University of Arizona

Organizer

• Wei GUO, University of California, Riverside

Individual Presentations

• The Effects of Wildfire Destruction on Housing Supply and Property Values in California - Presenting Author: Haleema Misal

• Quantifying Long-Term Economic Impacts of Wildfires on Community-Level Economies in California - Presenting Author: Esther Mejia, University of California, Riverside

• Administrative Inequalities in Federal Disaster Aid Distribution: Evidence from Wildfires in California - Presenting Author: Shan Zhou, Purdue University

• Who Gains and Who Pays? Property Tax Burden after Wildfires in California - Presenting Author: Wei GUO, University of California, Riverside