In the aftermath of the fires, California communities struggled with money


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California is a hot spot: every year, homes, businesses, and ecosystems are destroyed by fires fueled by climate change. But even after a fire is extinguished, wildfires can threaten the well -being of the community. A new paper by experts Yanjun (Penny) Liao and Carolyn Kousky, published in Journal of the Association of Environmental and Resource Economists (JAERE), Wildfires are known to increase revenue and revenue in California’s cities, but the combined result is a shortage of money for many years.

“The effects of wildfires are very significant,” said Liao, author and associate at Resources for the Future (RFF). “There’s a huge gap in the books about the impact of wildfires on the government’s finances. In the future.”

Using GIS data from the California Fire and Resource Assessment Program and financial reports from the State Department, Liao and Kousky looked at revenues and revenues for California cities in the mid -1990s. and 2015. They focused heavily on wildfires that affected about 10 percent of the population – and it’s known because most wildfires burn at low temperatures. They looked at each community up to five years after the fire to understand the long -term financial impact of the disaster. For comparison, the authors compared a affected town with a similar one that would be affected after the training period.

Liao and Kousky came up with the following ideas:

  • The town’s gross income increased by 10.5 percent on average in the five years after the fire. Specifically, the increase in inheritance taxes and property taxes is due to a separate nature of California’s property law. The sales tax was increased, probably because of the cost of rebuilding.
  • Revenue – collected for specific purposes through special taxes – increased 12.6 percent on average starting from the second year after the fire. Earnings should be selective, explaining the time lag.
  • Funds increased by an average of 17.3 percent in the five years following the fire. Most of the tax money is spent on public safety, community development, and transportation. Importantly, the investment in community development and public safety is higher than in five years, indicating a longer period of return. Investing in safety is associated with significant fire and disaster preparedness costs.
  • The overall impact on public finances is not good. Communities affected by the fires saw a 25-percent increase in the budget deficit and saw incomes drop by $ 97 per capita, according to with 10.7 percent of the total portfolio.

Interestingly, California’s increase in property taxes (an average of 21.2 percent over five years) could stand alone with the state. Proposition 13, a constitutional amendment passed in 1978, limited valuations when a home was built and sold. As the fire led to home searches – further evidenced by a 57 percent increase in property taxes – there has been an increase in home valuations in a state where they have increased. house prices in recent years.

“The availability of this independent constitutional amendment suggests that the negative financial effects of wildfires outside of California are greater, as higher property taxes reflect one of the reasons. high income for communities, ”said Kousky, RFF associate and director of the University of Pennsylvania’s Wharton Risk Management and Decision Processes Center. “But with these high property taxes, California’s cities are still in trouble.”

Kousky and Liao found that because the federal government often charged too much to maintain fires, many communities were cut off from the initial financial loss of a fire. But when fires die out, towns are often left to pick up the pieces with little federal support.

Most of the fires recorded in the study were of low intensity, but the state has seen severe fires in recent years. In 2017 and 2018 – the years not included in this study – California experienced some of the worst and most devastating fire seasons in history.

“The air is changing, and the fire is growing,” said Liao. “Communities need to change over time – hopefully our new paper can help point out where those changes need to be made.”

Research shows that Forest Service lands are not the main source of wildfires affecting communities

More information:
Yanjun (Penny) Liao et al, The financial impact of wildfires in California cities, Journal of the Association of Environmental and Resource Economists (2021). DOI: 10.1086 / 717492

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Directions: After wildfires, California communities struggle with money (2022, April 1) retrieved April 1, 2022 from California -struggle.html

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