Help the economy: Start a fire
Help the economy: Start a fire
28 March 2013
published by www.hcn.org
USA — Now that wildfire season is (already) upon us, some old-timer will surely start reminiscing about the days when work fires were common; when, on hot summer days, locals set forest fires in the hope that they and their buddies would get jobs on the federally-funded fire crews. A few dozen acres of brush gone up in smoke allowed the able-bodied folks in the rural community to get some decent government wages for a week or two. Its a logical economic exchange. Or at least it was.
In these days of mega-fires that torch not 30 acres, but 300,000, the concept of wildfires as job-creators has lost some of its folksy charm. When Leonard Gregg, a seasonal firefighter, started Arizona’s Rodeo Fire in 2002, it put people to work, sure, but it also burned more than 400 homes and 470,000 acres, and cost taxpayers millions. Suppression efforts for such fires can run $1 million or more per day. Add to that the cost of lost property, and a natural disaster turns into an economic one, too.
Surprisingly, though, even catastrophic fires can have an economic upside. And while a fire will never be profitable for a local community, the old idea of work fires isnt totally obsolete after all.
Over several days in September 2010, the Fourmile Canyon Fire ripped through the suburban forests outside of Boulder, Colo. It burned a mere 6,181 acres, small by todays standards, yet the fire was also costly. Thats in part because the flames focused on a section of wildland urban interface that was scattered with homes. According to a study by Headwaters Economics, Boulder County has one of the most heavily developed WUIs in the country, and fighting fires in such areas is far more costly than in undeveloped forests. A 2012 U.S. Forest Service postmortem estimated that $14 million was spent on suppression, management and burned-area restoration. On one especially nasty day, more than $1.5 million was spent in the effort to protect homes. The total bill for fire retardant, alone, was $343,000.
But the biggest expense was from charred homes. Insurers estimated that total losses were more than $200 million, in part because so many homes burned — a total of 168 — but also because they happened to be in one of the nations more costly real estate zip codes. Since many of the homes were under-insured (insurance policies were not updated to reflect rising values over the years), the total value of destroyed structures was probably higher. Real estate values and associated property tax revenues took a dive, too. The taxable value of lots where houses had burned dropped 80 percent or more after the fire. Even homes that escaped the flames saw decreases of 30 percent or more in assessed value, which was directly reflected in their respective property tax bills. As a result, the county lost some $800,000 in property tax revenues during 2011 alone, according to estimates by the Boulder County Assessor.
Typically, a fire can also batter the tourist economy. For 36 days in June and July of 2002, smoke billowed out of the hills north of Durango, Colo. as the Missionary Ridge Fire burned 70,000 acres and some 56 homes (insured losses were $18 million). It followed close on the heels of the Hayman Fire, which tore through the foothills of the states Front Range, and as word got out that a good portion of the state was aflame, potential visitors stopped coming during the peak of tourist season. In Durango, where tourism makes up nearly one-third of all economic activity, hotel occupancy rates plummeted beginning in mid-June, according to a report from the Federal Reserve Bank of Kansas City, a trend that held all summer. Ridership on the Durango-Silverton narrow gauge train and visitor numbers to Mesa Verde National Park dropped by 33 and 25 percent, respectively. It was one of the worst tourist seasons in the towns collective memory.
So Durango officials were pleasantly surprised to find, when all the sales tax figures were added up at the end of that devastating year, that the retail economy had weathered the fire relatively well, taking a less than one percent dip from 2001. (Up in Boulder eight years later, the Fourmile Fires impact on retail sales was virtually undetectable. In fact, sales tax revenues from September 2010 — the month of the fire — jumped considerably from the year before). Something had apparently offset the devastating losses to the tourism economy. Perhaps it was wildfire-related spending.
A study by the University of Oregons Ecosystem Workforce Program backs that hypothesis up, showing that wildfires can, in fact, have a positive impact on various sectors of the local economy.
The study focused on Trinity County, Calif., and the very active 2008 wildfire season. By the time the smoke all cleared, a whopping $156 million had been spent on fighting the fires, with a bulk of it coming from state and federal government. If youre a federal taxpayer, a figure like that makes you cringe. But viewed from another angle, its a sort of government stimulus package. After all, money is flowing into the community from the outside, and is being spent on wages, services and goods. If the locals have the resources to capture some of that cash, it can be a big bonus (if youve got an air tanker fleet nearby, youre golden). Trinity County, it turns out, didnt have the resources — there are no incorporated towns and not even a stoplight in the entire county — so only 5 percent of the money was dropped locally. Surrounding rural counties fared better, capturing some 23 percent. A sizable chunk of cash was also spent in other parts of the state. Locally, public sector wages and employment shot up, as expected. And in most other sectors wages and employment held steady or increased.
Up in Boulder, after the Fourmile Fire, the biggest economic stimulus package came from an even stranger phenomenon: An insurance-cash-fueled building boom.
Boulder County had mostly missed out on the housing construction boom that spread like a grassfire across its neighboring counties from 2003-2006. There just arent big swaths of cheap land that builders can cover with homes around Boulder, and land-use regulations are relatively strict. During the apex of the national boom — from 2004 to 2008 — only 35 single-family building permits, at a total value of $20.8 million, were issued in Boulder County. Things picked up over the next two years, but residential construction still proceeded at a moderate pace. Most of the homes that burned in the Fourmile Fire had been built back in the 70s, 80s or early 90s. The fire essentially cleared that land for new development.
To push things along, the county streamlined the building permitting process for those who had been burned out; some re-builders reported getting a new permit in as little as three days (a process that can normally take months). The Boulder County building boom commenced. During the 30 months since the fire, 182 permits for new single-family homes have been issued in Boulder County at a total value of $81.6 million. Thats almost exactly twice the number and value of permits issued in the 30 months preceding the fire. And about half the new permits were for burn-related rebuilds or remodels. While some of the rebuilds are modest, costing in the $100,000 range, more than a dozen are valued at $500,000 or more, with a small handful pushing $1 million.
Thats good news for builders, of course, who have seen more local business post-fire than they had for years, during a time when residential construction elsewhere had ground to a halt. Its also a bonus for county coffers. Since the new homes are built to higher standards than what theyre replacing, they are sure to have a higher assessed value than they did before the fire. Fears of an exodus from the burn area and from the associated real estate market never bore out. Anecdotal evidence suggests that many of those who chose not to rebuild ended up using their insurance to buy homes near the burned zones, keeping the market afloat. As for the land in the burned area, there wasnt much of a fire sale: Very few lots went on the market, and the ones that did arent especially cheap.
A 2005 county assessors report on the aftermath of the Missionary Ridge Fire down in Durango found that the overall demand for vacant land in the area kept property values in the burn area from crashing. It also noted that, as long as a parcel wasnt in a fire-created mudslide zone and the charred trees had been removed, it would likely remain appealing to potential purchasers. After a few years, they may not even be able to tell there was a fire. Indeed, a decade after the smoke cleared, most private parcels in the fire zone now have new homes, surrounded by grass and shrubs, with much better views than before.
Boulder County received $3.4 million in federal and state grants to rehabilitate the burned areas — another stimulus package. That money mostly went to regional contractors, and the work they do is already transforming the blackened landscape into a verdant one that is every bit as desirable, possibly more valuable and certainly less flammable than it was before the fire.
It’s a tragic irony that the Fourmile Fire ended up being set by a firefighter. It was inadvertent, and the firefighter was a volunteer, so it couldn’t really count as a work fire. But there’s a tiny bit of comfort in knowing that amidst all the devastation, there was a glimmer of an economic upside.
