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Impacts of Wildfires on Us GDP Growth, Essay Example

Pages: 19

Words: 5176

Essay

Abstract

When there are significant wildfires, the lives of workers, their families, and their employers are all affected. However, firefighting and repairing the damage may lead to new business prospects. Wildfires have not received nearly as much attention as other natural disasters regarding their impact on local economies. Large-scale wildfires have been shown to hurt employment, and this experiment sought to determine whether or not money spent on firefighting can mitigate such consequences. According to the conclusions of this study, big wildfires have favorable ramifications throughout a fire for the labor market in the short term. These effects can be seen throughout the fire. However, massive wildfires can potentially exacerbate the seasonal swings in employment currently in the economy and worsen it in the long run. In addition, suppression of spending can hurt the economy if it is not controlled locally. Thus, the number of suppression-related suppliers in the state significantly impacts local firms’ capacity to secure suppression contracts.

Keywords: Wildfire, Oregon, GDP

Introduction

Western United States rangeland managers have a vital and challenging responsibility to manage wildfire danger on rangeland, particularly in the Great Basin. For the first two years following a wildfire, ranchers will not be able to access public grazing land. Public grazing property is an essential aspect of ranching operations throughout the western United States because it provides a plentiful supply of forage for livestock. With the help of grazing delays in burned areas, this study aims to simulate and quantify the regional economic losses caused by wildfires. Despite the likelihood that these approaches could be helpful for wildfire studies, they have significant limitations because ranchers’ behaviors and options are not considered. Adjusting herd size altering animal mix to finding new feed sources is all included in this category. In addition, economic models for ranches must be paired with ranch-level economic models to understand regional economic consequences better. Thus, the economic impacts of wildfires in Oregon affect the increase in job opportunities for locals, loss of government resources, decrease in tourism activities, and poor resource mobilization for the local ranchers.

This paper evaluates the economic losses caused by decreased sectoral production, lower incomes, and changes in income distribution across different regional income groups due to the fires. The effects of these adjustments are being analyzed using two different models: the static IO model and the dynamic CGE model. Data from surveys and IO model multipliers were used to estimate regional impacts and costs associated with wildfire destruction. As a percentage of the sector’s overall output and the region’s overall output, it is estimated that the cattle industry lost about $22 million.

One of the primary objectives of this study is the integration of cheatgrass invasion dynamics into a stochastic wildfire model. This research intends to improve the work that has already been performed. Cheatgrass growth has accelerated wildfires in the Great Basin region. As stated earlier, there are two research objectives in mind for this project. The first step in determining how a wildfire will affect the local economy is to create a theoretical framework for connecting a ranch-level economic model to a regional SAM model. Secondly, a stochastic model is built to link the growth of cheatgrass to the occurrence of wildfires in the area. This portion of the report introduces the research area and explains the analytical methods used to determine the economic impact on the region. The empirical findings are discussed in the final section of the study before it comes to a close.

Literature Review

This section highlights the literature from previous studies about fire incidences in Oregon. If wildfires in the American West develop worse and more regularly, it could have severe consequences for the regional economy. However, there is a shortage of studies on the local economic ramifications of large fires and how suppression spending may moderate such repercussions, even though such research has been conducted on the community social implications of large fires (Parks et al. 33). Furthermore, there is a lack of information about how fires may affect the economy, perhaps serving as pulses or fast-moving factors against a long-term economic depression, a more slowly-moving variable.

The Monetary Impact of Natural Disasters

It has been found that the time it takes for the economy to recover from the effects of natural catastrophes varies from sector to sector and that the recovery is not uniform. The chance of adverse employment effects is lower in agricultural and natural resource-based counties than in industrialized counties, where there may be significant impacts on the built environment. Rural areas are more likely home to agricultural and natural resource-based counties. The construction and service sectors in densely inhabited or industrial regions may see rapid expansion due to restoration.

When a natural disaster occurs, the tourism industry suffers because some individuals may be reluctant to return in the wake of the tragedy. Significant or prolonged disasters can alter the flow of people and resources between geographic areas. Wildfires can linger for weeks or months, while natural disasters like tornadoes, earthquakes, and storms last for minutes or days at most (Davis et al. 107). The impacts of a fire, both during and after an occurrence, can have positive and harmful outcomes. Natural resource management and tourism will probably witness temporary variations in employment or pay due to fire closures or smoke obscuring their capacity to operate correctly. Loss of electricity, a drop in company profitability, and time away from the office are all possibilities.

The devastated industries may recover over the long term, but the downturn could persist. Suppression funding could come from various sources, such as federal contracts, employees, airline travel, state agreements, and items and supplies. Services such as direct fire suppression, post-fire cleanup, and fire-camp provisioning are all examples of tasks that might be contracted out (Lyon et al. 113). The opportunity for regional service and product providers has the potential to stimulate economic growth. However, there is no way to know how well this money would do for fire-stricken areas until it is spent.

Influences of Wildfires on Various Aspects of Community Life

Health impacts, economic losses, and associated social inequalities have received the lion’s share of research attention in the literature on the impacts of wildfires on communities. Many seasonal, agricultural, and easily perishable local businesses have been the subject of vulnerability studies. The decrease in taxable income is a possible secondary impact (Zhou and Knote). The majority of studies, however, either ignore or fail to appropriately evaluate the implications of wildfires on local labor markets and their impact on the economy.

In 2006 and 2007, the number of wildfires reached an all-time high with 38 unique events. There is a correlation between the number of wildfires and the temporal pattern of 0.35, and the t-value for this correlation is 1.2, even though both the frequency and intensity of flames have reduced over time (“Burn Severity” 65). There is a broad range of fluctuation in terms of annual average burned area, also known as the magnitude of a wildfire. Although there is little evidence that the two are meaningfully related, wildfires have grown in size.

Forests may be mixed coniferous, oak or chaparral shrublands. For the first time since these woods were discovered, fuel accumulation has increased the risk of large-scale conflagrations, which are uncommon in these ecosystems. Most of the state’s citizens live in the five smaller municipalities. More than half of all jobs in the US are held by local government organizations like schools (Ettlinger and Hensley). Between 2002 and 2009, public sector wages were anywhere from 70 to 95 percent higher than private sector wages. Once upon a time, the processing of forest products was the principal source of income. Ongoing operations include a 130-strong workforce at just one sawmill (Georgiou, 2021). The manufacturing industry in Oregon employed between 6 and 8 percent of the state’s workforce between 2002 and 2009, but its employees earned up to 40 percent more than the average salary in the state during that period. Between 2002 and 2009, manufacturing companies in Oregon employed between 6% and 8% of the state’s total labor force (Georgiou, 2021). The employees of these firms earned wages approximately 40% more than the average pay in the state.

During this period, 4 and 8 percent of the state’s workforce was utilized in the development and natural resource industries. It is typical for each of these companies to pay wages significantly greater than the standard for the state. Sectors in the leisure and hospitality industries, together with various other service jobs, employed more than one-fifth of Oregon’s labor force at wages that were less than half the state’s average pay. These positions brought in salaries that were greater than one-third of the average. In 2009, the state of Oregon had a rate of 19.3 percent for unemployment and 19.2 percent for poverty (Georgiou, 2021).

Wildfires Expenses

At more than $1 million each, five wildfires were suppressed between 2004 and 2007. One hundred wildfires were started in northern on June 20, 2008, after lightning struck the region north. As of June 29, President Bush had declared a state of emergency. A new IC team was put in place at each camp every 14 days to keep things fresh and new (Evans 15). As a result, the camps continued to function. Over a thousand individuals worked daily to put out fires, help with administration, and provide camp activities for most of the summer. There were teams from Type I, Type II, and Type III, as well as from Oregon, participating in the Invitational Competition.

The team’s makeup can indicate the severity of an occurrence, the level of expertise necessary to respond to it, and the complexity involved. Type I teams deal with the most challenging incidents, whereas Type II teams deal with the less problematic ones. Type I teams are used to deal with the most challenging situations. Incident command teams are typically firefighters from a single region deployed nationwide. For example, the massive Lime and Iron-Alp fire complexes were completely extinguished in August but burned until September. Weaverville and Hayfork, the state’s two most populous cities, were not under direct danger from these gigantic flames, which burned vast swaths of countryside. Efforts to put out fires in Oregon in the summer of 2008 cost the federal government more than $150 million.

Methodology

This section will discuss the methodologies and research questions explored during this research. The numbers obtained by the Forest Service were derived from financial transactions, labor supply data, and extensive interviews. As a result, the researchers examined Foundation Financial Information System transactions related to fire suppression at the Forest Service. In addition, Oregon’s employment and pay levels were also examined using a difference-in-difference regression model for this research. This study also used a regression model that predicts the quarterly mean and variation of employment and wage growth using an estimating technique known as autoregressive distributed heteroskedasticity. Finally, this study considers the economic impact of wildfires in regards to a model that considers serial autocorrelation and non-constant deviation in growth rates.

Main Research Question

  1. How do Oregon wildfires impact US GDP growth?

Sub-Research Questions

  1. What concepts have been deployed in specific economic subfields in Oregon’s workforce?
  2. Do employment and economic activities rise during the wildfires?

Interviews that were semi-structured and conducted in person with wildfire survivors who the media and government officials had previously interviewed were conducted in July of 2022. With open-ended questions, this research collected consistent data that allowed for examining previously unforeseen themes in the aftermath of the fires. The researchers further spoke with individuals, business owners, government officials and employees, members of non-profit organizations, and Forest Service staff, to name just a few. Purposeful sampling was used to choose the participants, who were chosen based on their level of expertise in handling forest fires and other natural disasters.

Using the past research in Oregon, the literature used could discover relevant sources of information for this study. A snowball sampling method was used to find the additional effects, and interviewers nominated people who might be able to shed light on those who have not studied in depth yet. Next, transcripts were analyzed and transcribed to compile a master list of repeatedly raised or significantly stressed topics during interviews. Using focused coding on the master list, the researchers gathered data that either supported or contradicted these key themes. Finally, to provide a more accurate picture of the effects, they merged the information from the interviews with information on declining consumer spending and the health of the labor supply.

The research focused mainly on the Oregon region. Because of the region’s geological characteristics, temperatures have risen, and rainfall has decreased relative to the national average. Agriculture and ranching, particularly cattle ranching, are important economic drivers in this state. Cattle ranching is a primary industry in the area, and the availability of public grazing land is critical to ranchers’ capacity to feed their animals. However, wildfires make it difficult for ranchers to access public grazing land. The questionnaire utilized for this study can be found in Appendix I, and the results can be discussed in part under Data Analysis (Georgiou, 2021).

Data Analysis and Results

This section discusses the results analyzed from the questionnaire in the appendix. According to data collected, employment and wages in Oregon grew by 4% more than projected throughout the wildfire periods. Still, federal employees’ average quarterly wage growth was around 22% larger than predicted during the quarter-to-quarter periods when wildfires occurred. Private employment in the natural resource sector surged 30% more than expected due to the wildfires, but average pay decreased by around 19% more than expected. With employment growth in trade, transportation, utilities, and leisure and hospitality barely affected by wildfire suppression, average wages in these sectors increased by about 9 and 11 percent over expectations.

Accordingly, the interviews in Oregon support many of the statistical findings and demonstrate the intricacy of a wildfire’s influence on a community’s economic well-being. The data from the labor market shows that many people in the region have improved their salaries and job prospects due to the recent wildfires and the attempts to put them out. From industry to industry, the impact was apparent in various ways. There was no disagreement among the interviewees that the fires had a long-term effect on land management and the production of wood goods.

Responses

How has Access to the STNF been prohibited at the time of wildfires?

Contractors could not continue their job since they could not participate in the fight against the fire. There would not be any room for one to log in if the fire was already full, so they would not even have a chance. Businesses appear to have had their economic difficulties exacerbated by the restrictions imposed on them. A recent fire at the sawmill and the ongoing economic crisis were cited by nearly everyone interviewed as contributing factors to the pattern of problems. It would be an understatement to say that things have been simple for Oregon in recent years.

Several local contractors on the edge of bankruptcy due to the recession have gained a significant amount of new work because of the fires. It is incredible how the fire-related activity saved the lives of so many displaced loggers who were about to lose everything they owned before they did.

Are there ways the fires are a blessing in disguise for the smaller businesses affected by the blaze?

Some people have been debt-free for a year or more due to this. When work begins on the secure area, people often have two crews ready to go, chippers, and some mapping for them to use.

How does the government provide additional funding sources for initiatives to minimize the use of harmful fuels was noted by one interviewee as a long-term advantage of the interview?

A special fund was established to help the affected counties after the devastating fires of 2008. For Oregon in 2009, the Fire Safe Council awarded volunteers between two and three grants.

How are results much more damaging for those in the tourism and hospitality industries?

Several outdoor activities, such as rafting and camping, had to be postponed due to the intense smoke. In addition, highways were frequently closed for repairs in the vicinity of the Oregon River.

How are the company’s owners worried about the long-term effects, notably a future decline in profitability?

To avoid repeating the same experience, companies could not return to Oregon when a consumer could not make it due to scheduling conflicts.

How are the fires’ length, timing, and recreational enterprises put to the test during their busiest season?

This deal ran throughout the summer and made it stand out from other similar offers, as people’s revenue is most vital in June, July, and August. Before the fires, Oregon’s tourism was already suffering from dry spells, limited water levels, and the broader economy.

It cost $150 million to put out the 2008 wildfires, with roughly half of the money going to contracted services. In addition to haulage and construction, industry buzzwords like private fire suppression and logging appeared in the company names of the broad group of companies awarded contracts. One-quarter of all federal expenditures were spent on federal personnel. Overtime, hazard pay, and contract workers who are paid as needed account for half of the entire cost of government with regards to employment. An additional 15% of the budget was made available through collaboration with several governmental agencies. The fires significantly impacted the country’s economy but were particularly felt in Oregon and the surrounding districts. Contracts for the majority of private non-aircraft suppression services were awarded to larger counties. They gave a wide range of responses to the question on the value of suppression efforts in their areas.

Only a tiny percentage of interviewed people said they had seen the Forest Service try to use local businesses for services and supplies. For example, a Forest Service employee bought supplies for the fire camp at various restaurants and shops. In addition to groceries, silverware was also purchased in this round of shopping. Local companies’ ability to assist emergency teams has improved, as indicated by replies from around half of those polled. Most of the personnel and infrastructure for the Type Type II teams and I came from outside the state. However, the type I and Type II teams got food and supplies from within the state. According to interviews, when Type III and State of Oregon officials took over the fire control attempt in the last two weeks, they tended to use local shops for accommodation and tidying up after the fire. This was the case even though they had access to state resources. While some residents could help with cleanup and other activities while the fire was blazing, they did not accomplish nearly as much as they should have.

According to an employee of the state government, firefighters might have an economic impact on the town by spending money locally when they are not on call when it comes to recommending to its members how they could help the local economy. As a direct result, the men would get haircuts or eat out. The nearby town drafted a list of expenses they saw as depressing to the firefighters. Residents would make their sandwiches and other delicacies in the past. Because a statewide equipment registration list existed, many people were unhappy. Additionally, the residents of the surrounding area were given scant consideration.

Discussion of Results

The consequences of the fire season on the economy and social well-being of Oregon were examined in an initial case study that included interviews and data on the labor market. As a result of this case study, some early findings and strategies for estimating the regional-scale effects of enormous wildfires on the labor market were developed. While short-term investments in fire suppression saved the closure of some firms, the blaze had this overall effect. Combining qualitative and quantitative data from Oregon, various effects linked to massive wildfires have been identified. In the wake of the suppression effort, some local firms could come out of a dilemma and avoid bankruptcy, according to conversations with locals who took part in the suppression attempt. As a whole, the state increased employment and paid following the wildfires. However, due to poor forest management, Oregon residents considered the fires an economic blow that exacerbated their already-existing crisis.

Experiment results in Oregon prompted a more comprehensive study of wildfire-impacted regions in the American West. Findings from a state-level examination of the job market for all counties affected by wildfires during the study period: Due to the enormous flames producing more job opportunities in significant wildfires, both local employment and average income rose during the first quarter of the fire. According to this study, local employment and pay growth were higher than expected, given seasonal trends and statewide economic cycles in the immediate aftermath of large wildfires. The consequences were felt in the immediate vicinity and the world’s economies. In counties not directly hit by wildfires but close to them, both average income and employment levels showed slight improvements. Significant wildfires have varying degrees of influence on numerous counties, each with its characteristics. Many counties in the US experienced very different effects of the recession. There have been more gains in employment in local economies that rely more on government and recreation. In contrast, employment losses in local economies have been more reliant on traditional service sector occupations.

While wildfires raged, the average income in counties with many federal and state government jobs rose. Enhanced overtime pay and increased hazard compensation are two factors that may result in higher earnings in the public sector. These elements might not have an impact on other industries. The local job market during the fire had a huge influence due to the significant value of the money invested in fighting the wildfire locally and how the suppression money was allocated affected the local labor market. The country’s heavy fire control and prevention expenditures slowed the local economy’s rapid growth. For every million dollars spent in the neighborhood, the local economy grew by an average of one percent. Local fire suppression expenses are a better way to gauge the economic impact of fire than the total cost of the blaze.

Wildfires can long-term impact local businesses, especially in rural areas. Although it benefited the economy immediately, it increased the unpredictability of jobs and earnings. Following the wildfires, the region’s economy experienced increased seasonal variation, which has made the economy unstable for at least two years. Natural calamities like wildfires have a long-term effect of changing seasonal cycles. Both domestically and internationally, this was the case. Increases in employment and compensation during wildfires are unlikely to compensate for the long-term effects. Still, they may reflect an increased local capacity to participate in suppression efforts and respond to increasing wildfire danger. Some businesses grew due to attempts to contain and recover from wildfires, while other industries saw contraction due to decreased demand for other goods and services.

Even though specific industries were negatively affected by significant wildfires, others saw tremendous growth during the months when enormous flames were active; there was a good rise in employment across the board. A wide range of industries, including natural resources, trade, information technology, and banking, saw a boost in employment in the wake of wildfires. On the other hand, construction, manufacturing, professional services, healthcare, and recreation employment declined more slowly than expected after the devastating consequences of significant wildfires. The number of government employees was unaffected by massive wildfires; nevertheless, the quantity of money government employees earned was affected by large wildfires.

Firefighters from the Forest Service, private contractors, and other government agencies work together to put out wildfires when they occur. Local companies can use contracts with private contractors during wildfires to provide services and bring money to the community. When we assessed total expenditures for suppressing purposes, there was more federal spending on contracts with private firms than on federal employees’ wages and government agreements combined. There was a wide range in the percentage of the overall cost of each large wildfire assigned to contracted services from burn to burn, depending on the total cost of the fire, the geography of the fire, and the overall cost of all significant wildfires that were occurring during a specific period. As the fire cost increased, more money went to third-party companies that provided paid services.

Overall costs of wildfires in the West have continued to rise, and as a result, private contractors’ share of the cost has also increased. The significant wildfire suppression effort involves funding for a wide range of support services in addition to the direct suppression measures. All the services offered by the highest-paid service providers in the study areas might be obtained in various ways. Businesses ranging from traditional service providers of natural resources to housekeeping and utility service providers have signed suppression contracts. More than only providing line troops and suppression equipment, these vendors also provided food catering, janitorial services, and other basecamp setup or support service providers in our sample of wildfires. In our sample of wildfires, this was the case. In some instances, a community can offer some of these services independently, but in other cases, the community’s capacity to engage in these activities is soon exhausted.

There was a significant increase in the number of contracts for recovery and rehabilitation services as a direct result of the devastation brought on by the horrific wildfires. As a result of the devastating wildfires that occurred in a number of counties, more contracts were given for restoring facilities and structures and providing natural rehabilitation services. This study examined local expenditures in terms of the capability of the local businesses in question to perform the services that are required for wildfire suppression operations. Considering that contracts are a primary mechanism for local communities to engage in activities related to the suppression of wildfires, this study examined local expenditures in this context. According to the data, there is a substantial correlation between the percentage of a company’s contracts purchased locally and the number of operational variables. The amount of money spent by local governments was approximately 1.5 times as much as the amount raised locally through suppression contracts when big wildfires existed.

Regarding local suppression contracts, some counties do better than others. The quantity of local contract capture varies greatly depending on the type of wildfire. Certain jurisdictions do not record any spending on contracts, while others do so much more. Contracts for fire suppression are centered in the states in the West. Firefighting contracts are hardly awarded in high-risk areas. As a result, some counties in the Western United States have a greater capacity for local control of wildfires than others. As demonstrated by the large-scale wildfire suppression efforts, there is no direct correlation between the likelihood of local capture and actual local fire risk. As an intriguing trend, it appears that some regions concentrate exclusively on getting suppression contracts, no matter where a fire occurs.

Governments with a larger pool of vendors spent more on local contracts. Local contracting varied widely even among counties with more suppliers, proving that having a large number of suppliers is a necessary but insufficient criterion for capturing local contracting opportunities. As a means of capturing the local populace, the composition of the local economy was a key consideration. There was a more robust rate of local capture in counties that specialized in a broader range of economic activities than in counties that specialized in a narrower range of economic activities. The availability of qualified suppliers and how economically specialized a location is are two elements that can be used to evaluate contracting capabilities. The type of enterprises that can be found in a state depends on its economic specialty. A more significant number and range of suppression-related businesses in counties that work with the federal government means more federal funding for suppression efforts. These two characteristics accounted for a total of 62% of the variation in local capture variation.

Recommendations and Conclusion

Large wildfires may have far-reaching economic consequences in the region that are intertwined, making the situation even more difficult. These consequences can be seen in the short term as a combination of quick and slow forces and the diversity of industries and businesses. Based on how people directly affected by wildfire outbreaks in their communities see the situation, these connections could either increase or aggravate the total economic impact. For instance, a long-lasting wildfire may immediately impact businesses and cause long-term recovery problems. Still, the weak economic conditions before the fire created a situation in which many vulnerabilities were intertwined. Understanding wildfires’ magnitude and complexity necessitate studying diverse data sources. Researchers were able to categorize their findings into three primary groups. As an initial point, the study’s findings show that wildfire damage can be rather considerable monetarily. Fighting fires and the damage they cause to rangeland pale compared to the devastation caused by wildfires. Therefore, rangeland managers must consider the economic impact on the surrounding area when managing public lands in the future. The recent economic crisis has severely affected the agriculture, service, manufacturing, and value-added industries.

The research model assumed that the participant understood all study aspects. Local ranchers can take preventive measures in advance of or even during a wildfire, decreasing the damage they sustain. Wildfire economic harm can be far worse than previously assumed if just limited information is given. Smaller ranches may be more vulnerable to delayed grazing in burned areas than larger commercial ranches. Because of the devastating wildfire, other smaller ranchers will probably lose their means of survival. The vast commercial rancher is expected to produce more due to the conversion. This possibility may have been overlooked by the model utilized in the study. Long-term research objectives include incorporating rancher and erroneous data into the study’s analysis.

Works Cited

“Burn Severity.” Encyclopedia of Wildfires and Wildland-Urban Interface (WUI) Fires, 2020, pp. 65-65.

Davis, Thompson E., et al. “The Psychological Impact of Hurricanes and Storms on Adults.” Lifespan Perspectives on Natural Disasters, 2009, pp. 97-112.

Ettlinger, Michael, and Jordan Hensley. “Employment Income Drops in More Low-Income Than High-Income Households in All States.” 2020.

Evans, Nick. “‘You keep going because you don’t want to let your team down’.” Emergency Nurse, vol. 29, no. 2, 2021, pp. 14-16.

Georgiou, Miltiades N. “COVID-19 on Unemployment Rate.” SSRN Electronic Journal, 2021.

Lyon, Katie M., et al. “Sharing contracted resources for fire suppression: engine dispatch in the Northwestern United States.” International Journal of Wildland Fire, vol. 26, no. 2, 2017, p. 113.

Parks, Sean A., et al. “Previous Fires Moderate Burn Severity of Subsequent Wildland Fires in Two Large Western US Wilderness Areas.” Ecosystems, vol. 17, no. 1, 2013, pp. 29-42.

Zhou, Bin, and Christoph Knote. “Multi-pollutant assessment of health impacts of 2021 summer wildfires in eastern and central Mediterranean Basin.” 2022.

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