Chart of the Week: Fire Damage and Recovery
The recent fire in Lāhainā, Hawaii has returned my attention to the question of how a town can recover from such extensive damage, if it is able to recover at all. During the 2022 AEA Summer Program, I collaborated with Gabriela Lahera Vázquez on a project that examined the aftermath of the Paradise, California fire. Unfortunately, we have yet to see any signs of recovery. The data from the LEHD Origin-Destination Employment Statistics (LODES) shows the percentage change in the number of jobs in the Paradise Census tracts compared to the rest of Butte county (the California county that contains Paradise). The fire began on November 8, 2018, and while we can observe a decrease in jobs from that year, the most significant declines occurred in 2019 and 2020.
The lack of recovery can be seen beyond the statistics. Here are views of an area of Paradise from Google Earth in September 2018 (just before the fire), December 2018 (a month after), and May 2023. In September you can see houses and other structures intermixed with trees. In December, everything looks charred and it’s hard to make out anything in particular. And this year although the street grid is still there, large areas of the former town have been cleared, and those roads lead nowhere in particular.
One question that arises is: What happened to the residents of Paradise after the wildfire? The town does not appear to be recovering, but how are the residents coping? In their recent research paper titled "California Wildfires, Property Damage, and Mortgage Repayment," Siddhartha Biswas, Mallick Hossain, and David Zink examine this issue (for the fire in Paradise and other recent California wildfires) by combining data on fire damage with mortgage data. Figure 3 illustrates two significant findings: first, many property owners affected by the fire are struggling with mortgage debt, as their delinquency rates have increased. This is not surprising as experiencing fire damage to one's home is a huge monetary and wealth shock.
When considering the recovery of places, in addition to the recovery of people, the lower half of the chart is more important. Individuals whose homes were fire-damaged paid off their mortgages at a higher rate. According to Biswas, Hossain, and Zink, this is likely due to people using their insurance funds to pay off their mortgage and abandon their damaged property, potentially due to being underinsured and unable to rebuild with the insurance payout received.
Do others come back in to re-establish themselves where the disaster took place? The satellite images 5 years after the Paradise fire indicate that recovery is slow, if it ever happens.