The Wildfires Are Still Burning, but the Economic Toll Is Becoming Clearer

by Pelican Press
131 views 9 minutes read

While this year’s wildfire rampage is far from over, its growing economic costs are becoming increasingly clear.

Although we’ve already seen about 10 times as much land burn in Canada this year than we did in all of 2022, this season is unlikely to be a record breaker in terms of financial devastation. That dubious title belongs to the 2016 season, when the Fort McMurray fire alone forced the evacuation of about 90,000 people and ultimately cost the insurance industry about 4.4 billion Canadian dollars.

That fire also significantly affected the Canadian economy by disrupting production at the oil sands.

But there’s no question that this year’s fires have taken a significant toll on thousands of people as well as governments and, it is likely, the Canadian economy as a whole.

[Read: Warming Set the Stage for Canada’s Record Fires, Study Finds]

[Read: Canadian Officials Condemn Facebook for News Ban as Wildfires Burn]

[Read: British Columbia Wildfire in Photos: ‘A Long-Lasting Scar’]

[Read: At Least 50 Buildings Have Burned in British Columbia Wildfires]

Among the most obviously affected are the 20,000 or so people who heeded orders and fled Yellowknife. They are now in their second weekend thousands of kilometers away from their homes, businesses and, for those who can’t work remotely, jobs. While sprinkler systems and continual forest clearing have kept the fire more or less 15 kilometers from the city, its threat remains. Some leaders in other communities in the territory have told evacuees they should plan on being away for weeks.

The main financial support now being offered is minimal: a single payment of 750 Canadian dollars, to people over 17 who have been out of work for at least a week because of the evacuation. While some insurance policies do cover the costs for evacuees, Caroline Wawzonek, the territorial finance minister, acknowledged this week that many people are so short of cash that they won’t be able to return home when the time comes without additional financial support, which she said the territory will provide. Chrystia Freeland, Canada’s finance minister, said that the federal government will help the territory out, but, to date, no specific amounts or programs have been announced.

In and around Kelowna, British Columbia, tens of thousands were also evacuated, and 181 structures, most of them probably houses, were consumed by fire.

While the fires are far from over in British Columbia, people who have lost their homes there and who are insured will soon face difficult questions. In particular, they will have to decide whether to rebuild on the charred landscape.

I returned to Fort McMurray about a year after its big fire, which had engulfed about 1,500 homes and numerous businesses. Many people, I soon found, had decided they would not rebuild but instead take cash settlements, which were significantly less than replacement settlements, sell their empty land and move on.

Those who did rebuild told me the settlements were often much less than the actual replacement value of their houses, sometimes by about 20 percent.

The real estate market dynamics are very different in Kelowna today compared to Fort McMurray at that time. Slumping oil prices and oil sands layoffs were already driving down housing prices in 2016. The Kelowna area, by contrast, is one of Canada’s fastest growing markets. But that is unlikely to mean that settling up with insurers is a seamless and satisfying process for those whose homes are now ash and rubble.

As for the insurance industry, an analysis by DBRS Morningstar, a debt rating agency, anticipates that the losses from fires to date will come in at 700 million to 1.5 billion Canadian dollars “but remain manageable for insurers.”

Both Kelowna — where the province banned travelers from entering for a period, in order to free up hotels for evacuees and fire crews — and Yellowknife have taken blows to their important tourism industries. Kelowna, with its impressive lake and vineyards, is a top summer destination in Western Canada. August and September are peak months for viewing the aurora borealis in Yellowknife, making it a global tourist attraction. When I stayed in a hotel there while on assignment last year, many signs were posted in English, Yellowknives Dene and Japanese.

Few economists are forecasting the effect on Canada’s economy as a whole yet. And we have to wait for hard numbers. The gross domestic product figures for this month won’t be released until the end of October.

But in an analysis issued this week, Capital Economics, a private forecasting firm based in Britain with operations in Canada, said that historically there’s no real connection between how much forest burns and any negative economic implications. While the Fort McMurray fire caused G.D.P. to fall by a significant 0.6 percent in May 2016, that year was a relatively mild one as far as wildfire activity goes.

This year, however, the report said that “with the fires so widespread, we are seeing more of an impact than usual.” It concludes that drops in sales in Alberta and British Columbia related to fires likely were a significant force behind the 0.2 percent decline in G.D.P. during June.

The report offers some consolation, advising that fire-induced economic slumps generally disappear quickly. But there may be one lingering and unwelcome effect, in that “the fires could leave a lasting impact on consumer prices due to higher insurance premiums.”

  • Ann Johnson was a 30-year-old teacher, volleyball coach and mother of an infant from Regina when a stroke took away her ability to speak and paralyzed her left side. My colleague Pam Belluck describes how, 18 years later, “implanted electrodes decoded Mrs. Johnson’s brain signals as she silently tried to say sentences. Technology converted her brain signals into written and vocalized language, and enabled an avatar on a computer screen to speak the words and display smiles, pursed lips and other expressions.”

  • Isabel Crook, a China-born daughter of Canadian missionaries who became one of that country’s most celebrated foreign residents, known there as an educator, anthropologist and strong supporter of the Communist state, has died at the age of 107.

A native of Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported about Canada for The New York Times for two decades.

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