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Economic Analysis of the 2025 Wildfires in California

By: Dr. Alejandro Diaz-Bautista, Economist and Research Professor (PhD).

The wildfires in California this year have been extremely devastating, particularly in Los Angeles and Southern California. At least 16 people have died due to the wildfires, and more than 180,000 residents have been evacuated from their homes.

The largest fires are the Palisades Fire and the Eaton Fire. The Palisades Fire has burned over 22,000 acres, while the Eaton Fire has burned more than 14,100 acres. The Palisades Fire is currently 11% contained, while the Eaton Fire is 15% contained.

Thousands of structures and buildings have been destroyed. In Los Angeles and surrounding areas, wind-fueled wildfires have wiped out entire communities and more than 12,000 structures. Air quality has deteriorated, posing significant health risks to residents. Authorities have issued an emergency public health warning.

More than 14,000 people, including National Guard personnel, are working to contain the fires. International support has also been provided, including assistance from Mexico and even Canada. The fires have been fueled by strong Santa Ana winds, low humidity, and dry conditions. Unfortunately, the danger is far from over, as the winds are expected to intensify again in January 2025.

The Economic Cost of the Wildfires

Wildfires in L.A. by Photojournalist, Soly Moises.

The economic cost of the 2025 wildfires in Los Angeles is staggering. The 2025 wildfires have been exceptionally destructive, and the total cost has yet to be fully determined. However, some preliminary estimates give us an idea of the scale of the damage.

J.P. Morgan analysts predict insured losses could be around $10 billion. AccuWeather estimates the total damage and economic loss will range from $52 billion to $57 billion. AccuWeather also mentioned that if other structures are significantly damaged, economic losses could increase substantially.

Initial total estimates suggest that these fires could become the costliest wildfires in U.S. history, with some estimates reaching between $135 billion and $150 billion.

Dr. Alejandro Díaz-Bautista, Professor and Researcher in International Economics at Colef
Distinguished member of the National System of Researchers of the National Council for Humanities, Sciences, and Technologies (Conahcyt) and now with the new Secretariat of Science, Humanities, Technology, and Innovation (Secihti).

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