The Cost of the Effect of Disasters on the Economy of California

Natural Disasters has direct impact on country’s or state’s economy. U.S and Japan are top two economically developed countries which have frequent natural disasters. In early months of 2018 there were heavy losses from natural disasters like hurricanes Harvey, Maria and Irma in U.S. But country was expected to bounce back from that loss to recovery. But second half was even worst with an accumulation of $180B loss from floods, cyclones, earthquakes and wildfires.

California’s wildfires in last couple of years was devastating and cost the government approximately $85B. Wildfires are the major reason for downfall of economy of California. Well California has the highest economy growth in the country with 3.6% where the country’s average is approximately 2.2%. As these wildfires scorch thousands of acres which leads to loss in lives, agriculture land, farms, residential areas etc. leaving loss to home owners, farmers and government. There will losses to industries and wine growers in California which again leads to loss in jobs, human resource eventually. From these losses counts to $70B and in order to recover from these disasters the State Government will impose increase in taxes for certain amount of period which would be approximately $15B. The Napa wine growers faced $300 million alone in 2018 disaster. The rescue would be immediate expenses in order to save people and property from fires. The fund for the fire department will be allocated with certain expectations if the expectation is exceeded then funds allocated to different department will be transferred to fire department and there will be a dry spell in California economy. The forest service has spent $2.4B each year with suppression costs exceeding $2B.

Well, if California is considered as a country it would rank 7 th with $2 trillion gross domestic product income. As wildfires has hard hit on agriculture farms and wine farms directly. California being number one producer of fruits, nuts, wine and vegetables in U.S, the employment loss would be approximately 2.5 percent of California’s employment. On the other hand government has to take care of fatalities caused in wildfires, 5800 destroyed homes and properties and approx. 100k evacuated people. This will ultimately lead a hole in California’s state budget. Speaking on current year approximately $470 million of state emergency funds for firefighting has been used in last three months.

Overall, we cannot stop any of the natural disasters such as hurricanes, earth quakes, tornados, tsunami and wildfires. But we can be cautious by taking some precautions. Speaking of wildfires, the precautionary steps would be maintaining some dry lands without any plants, trees and agriculture farms so that the wildfires will not spread. It was 8.5 million acers was affected by wildfire last year. By taking precautions we might have many properties and lives which would save the economy as well. Yes it is expensive to maintain various precautions irrespective any kind natural disaster. But by maintaining so, it would be less when compared to after effects. Instead of providing same amount of funds all states, the federal government should allocate funds to respective states appropriately. California and Texas are most affected states with natural disasters such as floods, hurricanes, tornados, earthquakes and wildfires. Though they have highest revenue income it is tough to respond with state budgets to all natural disasters.