How Wildfires Impact the Economy

Wildfires are increasing in frequency, intensity, and destructiveness

A firefighter protects homes during wildfires in California.

David McNew / Getty Images

Wildfires in the U.S. have caused more and more damage over the years. More than 10.3 million acres burned as the result of roughly 58,950 wildfires in 2020 alone.  Unfortunately, the biggest factor is climate change. With the continued increase in temperature, wildfires are expected to remain a large risk for decades to come.

Key Takeaways

  • The states with the highest risk of wildfires are California, Texas, Colorado, Arizona, and Idaho.
  • Wildfires are caused by higher temperatures, shorter winters, more pests, drought, and fire suppression.
  • The biggest underlying cause is climate change.

2020 Fire Season

By mid-December 2020, more than 57,000 fires had occurred. More than 10.3 million acres had burned.

Five of the six largest wildfires in California history burned in August and September 2020, prompting the declaration of a state of emergency. The largest, the August Complex Fire, lasted until November and burned 1.03 million acres.

Economic Damage of Wildfires

Both wildfire intensity and frequency are worse now than in the past 10,000 years.

Fire season itself is longer, too, and that allows more time for fires to erupt. In California, wildfire season is now year-round. Before, fire officials could use the fall and winter to plan and regroup.

The 10 costliest wildfires in U.S. history all occurred in California.

One reason is that the state has the most number of properties at risk. Over 2 million buildings are at high to extreme wildfire risk. Risk increases in rural areas that are close to forests, on a hill, and with little access to firefighting equipment.

Wildfire Season Over Time

The worst fire season in modern record-keeping (since 1983) was in 2015. The National Interagency Fire Center reported that 10,125,149 acres were destroyed by 68,151 fires. The third-most damaging year was 2017 when 10,026,086 acres were burned by 71,499 fires.

The deadliest wildfire in U.S. history was the 1871 Peshtigo fire in Wisconsin. It killed 1,500 people.


The 2019 wildfire season was relatively mild compared to the previous two years. There were 50,477 U.S. wildfires that burned more than 4.6 million acres. More than half of this (2.5 million acres) was in Alaska.


In 2018, more than 58,083 wildfires burned more than 8.7 million acres and generated around $24 billion in damage. 

The Camp Fire in Northern California was the costliest in U.S. history.

The Camp Fire occurred in November and cost over $10 billion. It wiped out the town of Paradise and destroyed 18,804 structures. It killed 85 civilians and injured several firefighters. The fire was caused by poor maintenance of power lines owned by Pacific Gas & Electric (PG&E). The third costliest fire also occurred in November. The Woolsey fire cost over $4.2 billion. It burned 96,949 acres, destroyed 1,643 structures, and killed three people. 

The eighth most destructive fire was the Carr fire. The extreme heat at the fire's center created a wind shear that caused the air to spin, causing a firenado. The damage was around $1.3 billion.

In August alone, at least 110 active wildfires burned almost 2 million acres. The haze from the wildfires drifted to New York and parts of New England.


In 2017, there were 71,499 fires that burnt 10 million acres and generated $21 billion in losses. 

Forest fires in 2017 were so monstrous that they pushed smoke into the Earth's stratosphere. The smoke circled the globe within two weeks and remained there for months. The impact is comparable to a moderate volcanic eruption.

The Tubbs fire occurred in October, killed 22 people, and cost $8.7 billion. Also occurring in October, the Atlas fire killed six people and cost $3 billion in damage. In December, the Thomas fire caused damage totaling $2.3 billion.

How to Prevent Wildfires

Individuals can prevent wildfires by being careful to extinguish campfires, cigarettes, and burned trash.

There's a lot that government policies can do, such as increasing resources for firefighting and fire prevention and developing recovery plans. Planning boards should prevent human development in forests.

Water conservation policies will reduce the effects of drought. These include waste-water recycling, desert landscaping, and low-flow appliances. Subsidies should go to drought-resistant crops like prickly pear instead of thirsty crops like cotton.

Foresters should remove spindly and weak trees. The largest trees will survive wildfires, providing seeds for future generations.

Most important, the government must stop climate change. Nations must cap the amount of greenhouse gas emitted into the Earth's atmosphere. They can also subsidize tree planting, both to replace trees lost to wildfires and absorb carbon dioxide.

What Causes Wildfires

People cause nearly 85% of wildfires. This includes everything from unattended campfires to downed power lines.

The growing severity of wildfires has five other causes. They are rising temperatures, shorter winters, more pests, drought, and fire suppression. The first four are caused by climate change. It does this by causing heat waves that dry out the forests.

A 2016 study by the National Academy of Sciences found that climate change had doubled the number of acres burned since the mid-1980s.

Rising Temperatures

Rising temperatures increase evaporation. The atmosphere draws more moisture from soils, making the land drier. Wildfires are driven more by the temperature and moisture content in the air than by the moisture content in the soil.

Shorter Winters

Shorter winters mean there is less snowmelt in the spring. That also dries the soil and vegetation. 


Many pests, such as the pine bark beetle, don’t die off in the shorter winters. As a result, they are killing a record number of trees. The U.S. Forest Service estimates that 100,000 beetle-infested trees fall daily. That provides dry fuel for forest fires.


Drought is a reduction in precipitation over an extended period resulting in a water shortage. It’s most people's biggest climate change worry, according to a Pew Research Study. 

Climate Change

Climate change creates more severe droughts through a vicious cycle. Greenhouse gases trap heat. The warmer air absorbs moisture instead of releasing it in rainfall. Hotter air also increases evaporation from lakes and rivers, reducing water sources.

Without rainfall, the plants that retain moisture in the soil die. The bare earth creates even drier conditions. When it does rain, water just runs off without absorbing into the water table.

Dead vegetation, warmer air, and decreased rainfall also increase the frequency and severity of wildfires.  

Wildfires increase greenhouse gases as the fires burn carbon stored in the trees and plants. Once destroyed, those trees are no longer around to absorb carbon dioxide from the air.

The Future of Wildfires

The National Climate Assessment predicted that the number of wildfires “is projected to further increase as the climate warms.” Alaskan wildfires would increase resulting in "a fire regime unprecedented in the last 10,000 years." The scientists predict that the total area burned would increase between 25% and 53% by 2100.

The study predicted that wildfires in the Greater Yellowstone ecosystem will greatly increase by 2050. In the West, fires greater than 50,000 acres will increase.