UCSD - University of California - San Diego

08/31/2026 | Press release | Distributed by Public on 08/31/2026 08:20

Wildfire Losses Have Lasting Economic Consequences for Homeowners

Published Date

August 31, 2026

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A new National Bureau of Economic Research working paper from the University of California San Diego shows that wildfire damage can have long-term economic consequences for households, resulting in income losses, relocation of residents as well as slow rebuilding for several years after a fire.

The study combines home address-level damage data from about 100,000 individuals and 50,000 homes inside of wildfire burn areas.

It finds that wildfire victims are wealthier on average than victims of some other natural disasters, but the burden of wildfire damage is unevenly distributed. Within fire zones, lower-income households are more likely to lose their homes.

The paper, coauthored by Judson Boomhower, associate professor in the Department of Economics at the UC San Diego School of Social Sciences finds that households that lose their homes in a wildfire see their earnings fall for three years after the event, with losses peaking at about 10% in the first year. Over that period, the average wildfire victim forgoes the equivalent of 26% of their pre-fire annual income, or about $35,000.

"While wildfire victims on average are relatively affluent, we find that losing a home leads to years of financial disruptions that go beyond the immediate costs of rebuilding the burned property," Boomhower said. "Earnings fall for years after the fire and people do not simply bounce back even after rebuilding."

Many burned homes take years to be reoccupied. Four years after a wildfire, about half of burned homes remain unoccupied. Among re-occupied homes, average resident income is systematically higher and average age is systematically lower than pre-fire levels. The authors say these data are consistent with anecdotal reports of what has been referred to "post-disaster gentrification."

While the study does not directly measure whether homes had adequate insurance coverage, it offers a detailed look at the economic consequences of wildfire loss by linking property damage data with income tax and Census records. The analysis focuses on occupants of single-family homes, while also examining differences by homeownership status, giving a fuller picture of how households are affected and how their recovery unfolds over time.

Boomhower says the findings show that wildfire is not only a climate and public safety issue, but also a challenge for markets and policy.

"We're facing a much warmer world and the big question now is how markets, innovators and policymakers can help society adapt," Boomhower said.

The authors conclude that the economic burden of wildfire extends well beyond the fire line itself. As fires become more destructive and more frequent, policymakers, insurers and households will face urgent pressure to adapt to a warmer and more fire-prone world.

The paper is co-authored by Patrick Baylis of the Vancouver School of Economics at the University of British Columbia, Jonathan Colmer of the Department of Economics at the University of Virginia, and John Voorheis of the Center for Economic Studies at the U.S. Census Bureau.

Read the full paper, "The Distribution and Consequences of Disaster Property Losses: Evidence from Tax Returns of Wildfire Victims," on the National Bureau of Economic Research website.

Learn more about research and education at UC San Diego in: Climate Change

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