Our New Future
Our New Future

Climate change is fueling wildfires in the West, ravaging local economies

Key Points
  • Despite official resistance to the idea in the Trump administration, the wildfires raging across California, Oregon and Washington — swallowing millions of acres and leaving unbelievable destruction in their wake — are the latest indication of climate change, according to a consensus of scientists.
  • All told, the physical damages could mount into the hundreds of billions of dollars, while jeopardizing the stability of local and community banks, as well as insurance markets.
  • Amid the destruction, Washington Governor Jay Inslee has said that rather than calling these catastrophic fires "wildfires," they should instead be known as "climate fires."
Bobcat fire approaches Sierra Madre and Arcadia communities in California, U.S., September 13, 2020 in this picture obtained from social media. Photo taken September 13, 2020.
John Mirabella | Reuters

Despite official resistance to the idea in the Trump administration, the wildfires raging across California, Oregon and Washington — swallowing millions of acres and leaving unbelievable destruction in their wake — are unequivocally the latest indication of climate change, according to a consensus of scientists. And beyond the extreme emotional toll for those affected, the long-lasting damage has economic ramifications that extend from the impacted communities themselves all the way to the heart of the country's financial institutions. All told, the physical damages could mount into the hundreds of billions of dollars, while jeopardizing the stability of local and community banks, as well as insurance markets.

The figures are staggering. More than 17,000 firefighters are currently battling 25 major wildfires in California alone, and more than 3.3 million acres have burned across the state this year. Fire activity has been elevated since Aug. 15 in California, during which time 25 people have died, and more than 4,200 structures have been destroyed. In Oregon, more than 940,000 acres have burned, leaving at least ten people dead, while fires have ripped through more than 600,000 acres in Washington. In total, the fires have burned an area larger than New Jersey.

Wildfires have always been a part of life on the West Coast, in particular, where urban areas and forests closely abut each other and the climate inland is arid. But warmer temperatures and drier conditions, caused by climate change, have made the wildfire season longer and more intense, with increasingly devastating consequences.

"Science is very clear that there is a direct link between warming and more burning," said Jennifer Balch, an associate professor of geography at the University of Colorado Boulder. "If we don't take the science seriously, we're essentially putting lives and homes at tremendous risk."

"The fingerprints of climate change are all over what we're seeing right now in California, Oregon and Washington," added Rachel Cleetus, policy director for the climate and energy program at The Union of Concerned Scientists. "This is a moment that should be a super sobering alarm and wake-up call."

VIDEO5:2505:25
Fmr. presidential candidate Tom Steyer estimates economic impact of wildfires will be in the billions

As the fires rage on, the issue has taken center stage on the campaign trail. President Donald Trump, who has questioned human-caused climate change, has repeatedly said the fires are due to poor forest management. Democratic presidential nominee Joe Biden has taken a very different stance, saying during a speech on Monday that "It [climate change] is happening everywhere. It is happening now. It affects us all."

Forest management certainly plays a role in maintaining healthy ecosystems, but experts are quick to note that  it is not the leading factor in  the size and scope of the fires we are seeing today. There are short-term fixes and preventative measures that at-risk communities can take, including prescribed burning and choosing more fire-resistant materials for houses. But at the end of the day, only so much can be done at the local level.

"California, folks, is America fast forward," Governor Gavin Newsom said during a press conference on Friday. "What we're experiencing right here is coming to communities all across the United States of America unless we get our act together on climate change."

'Climate fires'

Climate change is causing hotter temperatures and drier soils, early snow melts and long droughts, all of which are prime conditions for out-of-control fires. The last decade was the warmest on record — 2019 was the second-hottest year in history — and 2020 is on track to be one of the 10 hottest years ever recorded.

"This decade is way worse than the previous several decades," said Balch, who is also director of the University of Colorado Boulder's Earth Lab, of the fires. "I'm expecting that this trend is going to continue, and that we're going to see more big fire years in the years to come."

VIDEO3:1003:10
West Coast wildfires still scorching millions of acres

Forest management, including years of fire suppression, does play a role, said Cleetus of the Union of Concerned Scientists. Without prescribed burnings, which are typically low-intensity fires that target underbrush, flammable materials build up on the forest floor. That means that once a fire starts, plentiful underbrush causes more powerful flames, including those that shoot up into the canopy, bringing down big trees. Additionally, there are now more people and structures at the wildland-urban interface, which are in or adjacent to areas prone to wildfires.

But Cleetus is clear that climate change, rather than forest management, is the predominant factor. "Forest management is no panacea for what we're seeing right now in the West," she told CNBC. "Conditions are such now, because of climate change, that we're going to continue to see these longer, more intense, more disruptive fire seasons. Climate change is a major driver behind the growth of these wildfires."

Amid the destruction, Washington Governor Jay Inslee has said that rather than calling these catastrophic fires "wildfires," they should instead be known as "climate fires."

"We know why this is happening … They're climate fires because that's what creates the conditions that makes them so explosive," he said on Sept. 11.

The Webber family search for belongings through their home, which was gutted by the Almeda fire, in Talent, Oregon, U.S., September 13, 2020.
Adrees Latif | Reuters

Shift away from 'emergency response mindset'

While acknowledging the role of climate change and the need for policy action at the federal and state level, there are some immediate actions that states facing massive wildfires can take in order to reduce risk. Most importantly, Balch noted that we need to move away from the "emergency response mindset." 

The U.S. spends billions of dollars fighting fires each year, but just a fraction of that is spent on preventative measures. One effective remedy might be to increase prescribed burning, although Balch said that can be difficult, thanks to opposition from local communities who don't want the smoke, among other things. 

Using fire-resistant building materials could also be helpful. But downed power lines also lead to fire, as does careless human behavior. Over 80% of fires are started by people, through such things as camp fires, explosive fireworks and cigarette butts.

California, folks, is America fast forward. What we're experiencing right here is coming to communities all across the United States of America unless we get our act together on climate change."
Gavin Newsom
Governor of California

"There's a lot of ways that we start fires that we're not acknowledging, which is also part of the problem," Balch told CNBC. "We need more comprehensive policies from the local to the state to the national," added Cleetus. "This is not something that individual communities and individual homeowners are going to be able to solve on their own."

While the West Coast grapples with fires, other parts of the U.S. face their own extreme weather events. Hurricane Sally became the latest storm to batter the Gulf Coast after it made landfall on Wednesday, as this year's hurricane season continues to set records. It's just another instance of climate change at work, according to scientists.

The carcass of a burned car is seen by the Oak Park Motel destroyed by the flames of the Beachie Creek Fire in Gates, east of Salem, Oregon on September 13, 2020.
Rob Schumacher | AFP | Getty Images

Economic impact

Since the 1980s, the total damage from extreme weather events has reached $1.75 trillion and the annual figures have quadrupled, according to Nathaniel Keohane, who is senior vice president for climate at the Environmental Defense Fund.

"No one's given an estimate so far of what this is going to cost, but it's definitely in the tens of billions or hundreds of billions of dollars," former presidential candidate Tom Steyer said Monday on CNBC's "Closing Bell."

But beyond the dollar value of physical damages, extreme weather events also pose a risk to the stability of the country's financial system, which underpins the day-to-day actions that drive the economy, from small-business loans, to home mortgages, to commercial real estate loans.

"All of those things are dependent on the financial sector and the stability of the financial sector," Keohane told CNBC. He said risks are especially high at the regional level, where climate events can jeopardize the health of community banks. Financial institutions in places like Florida and the Gulf Coast, for example, that hold a lot of real estate are vulnerable to the hurricanes and flooding that the region faces. In the Midwest, climate change-driven droughts are compromising agricultural banks that farmers depend on for loans. The connection between climate change and the financial risk at both the national and regional level is not new, but as extreme weather events become more frequent, the consequences compound.

Keohane was one of the committee members behind a recent report commissioned by the Commodity Futures Trading Commission titled "Managing Climate Risk in the U.S. Financial System." 

Fire is seen in Salem City, Oregon, U.S., September 8, 2020, in this picture obtained from social media. Picture taken September 8, 2020.
ZAK STONE | ZAK STONE via REUTERS

The report concluded that "a world racked by frequent and devastating shocks from climate change cannot sustain the fundamental conditions supporting our financial system."

If California were a stand-alone country, it would be the fifth-largest economy in the world, meaning disruptions caused by the fires can have severe financial implications. The U.S. depends on California's agricultural produce. Outdoor laborers who are currently harvesting are being exposed to dangerous smoke conditions, while vineyards in wine country that might otherwise have welcomed tourists have been forced to close.

"Climate change … has the potential to create the kind of risks that are going to become increasingly uninsurable," Rachel Cleetus said.

She noted that low-income communities and communities of color are often those most exposed to climate change-related risks, whether it be wildfires, hurricanes or droughts. In California, for example, the cost of housing has pushed people into high-risk areas that were previously uninhabited. Looking ahead, she argues that carefully crafted national policies need to be implemented. They can't just restrict housing. Rather, they have to provide a pathway so that people have options and don't have to stay in places that are putting them at risk. "The burden is extraordinary and it will hurt low-income folks the most," she said.

An orange glow suffuses this San Francisco street as wildfire smoke fills the atmosphere on Sept. 9, 2020.
Jordan Novet | CNBC

Impacts felt across the country

As the wildfires raged in California, pictures surfaced across the internet of an orange haze hanging over San Francisco, giving the impression of an eerie, apocalyptic scene. The air quality deteriorated so much that it reached harmful levels up and down the West coast, with Portland registering the worst air in the world and Seattle coming in at number three, according to IQAir. By Tuesday, the smoke had made its way all the way to New York City.

Heart-wrenching photos have become the face of climate crisis — whether it be of people surveying the remnants of a burned or flooded home or a koala being nursed back to health after getting caught in a blaze in Australia. Not surprisingly, Cleetus noted that devastating climate events have an "extraordinary mental health toll" on those impacted as well. 

While short-term changes can be made to alleviate some of the risks from extreme weather events, experts say the only long-term solution is aggressive action at the national and global level to drastically reduce emissions.

"We used to talk about climate change as something that was going to happen far off in the future," said Keohane. "We've waited so long that it's now happening now. We're seeing the impacts of it: on our ecosystems; we're seeing them in terms of the threats to people's homes and livelihoods; we're seeing it in terms of human health."

A dehydrated and injured Koala receives treatment at the Port Macquarie Koala Hospital in Port Macquarie on November 2, 2019, after its rescue from a bushfire that has ravaged an area of over 2,000 hectares.
Saeed Khan | Getty Images