IDEAS home Printed from https://ideas.repec.org/p/fip/fedcwq/93562.html
   My bibliography  Save this paper

Effects of Wildfire Destruction on Migration, Consumer Credit, and Financial Distress

Author

Listed:

Abstract

The scale of wildfire destruction has grown exponentially in recent years, destroying nearly 25,000 buildings in the United States during 2018 alone. However, there is still limited research exploring how wildfires affect migration patterns and household finances. In this study, we evaluate the effects of wildfire destruction on in-migration and out-migration probability at the Census tract level in the United States from 1999 to 2018. We then shift to the individual level and examine changes in homeownership, consumer credit usage, and financial distress among people whose neighborhood suffered damaging fires. We pair quarterly observations from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel with building destruction counts from the US National Incident Management System/Incident Command System database of wildfire events. Our findings show significantly heightened out-migration probability among tracts that experienced the most destructive wildfires, but no effect on in-migration probability. Among the consumer credit measures, we find a significant drop in homeownership among those treated by major fires. This is concentrated in people over the age of 60. Measures of credit distress, including delinquencies, bankruptcies, and foreclosures, improve rather than deteriorate after the fire, but the changes are not statistically significant. While wildfire effects on migration and borrowing are measurable, they are not yet as large as those observed following other natural disasters such as hurricanes.

Suggested Citation

  • Jennifer Balch & Katherine Curtis & Jack DeWaard & Elizabeth Fussell & Kathryn McConnell & Kobie Price & Lise St. Denis & Stephan D. Whitaker, 2021. "Effects of Wildfire Destruction on Migration, Consumer Credit, and Financial Distress," Working Papers 21-29, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:93562
    DOI: 10.26509/frbc-wp-202129
    as

    Download full text from publisher

    File URL: https://doi.org/10.26509/frbc-wp-202129
    File Function: Full Text
    Download Restriction: no
    File URL: https://libkey.io/10.26509/frbc-wp-202129?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Leah Platt Boustan & Matthew E. Kahn & Paul W. Rhode, 2012. "Moving to Higher Ground: Migration Response to Natural Disasters in the Early Twentieth Century," American Economic Review, American Economic Association, vol. 102(3), pages 238-244, May.
    2. Robalino, Juan & Jimenez, José & Chacón, Adriana, 2015. "The Effect of Hydro-Meteorological Emergencies on Internal Migration," World Development, Elsevier, vol. 67(C), pages 438-448.
    3. Geoffrey H. Donovan & Patricia A. Champ & David T. Butry, 2007. "Wildfire Risk and Housing Prices: A Case Study from Colorado Springs," Land Economics, University of Wisconsin Press, vol. 83(2), pages 217-233.
    4. Seong Yun & Brigitte S. Waldorf, 2016. "The Day After The Disaster: Forced Migration And Income Loss After Hurricanes Katrina And Rita," Journal of Regional Science, Wiley Blackwell, vol. 56(3), pages 420-441, June.
    5. Roman Hoffmann & Anna Dimitrova & Raya Muttarak & Jesus Crespo Cuaresma & Jonas Peisker, 2020. "A meta-analysis of country-level studies on environmental change and migration," Nature Climate Change, Nature, vol. 10(10), pages 904-912, October.
    6. Busby, Gwenlyn & Amacher, Gregory S. & Haight, Robert G., 2013. "The social costs of homeowner decisions in fire-prone communities: Information, insurance, and amenities," Ecological Economics, Elsevier, vol. 92(C), pages 104-113.
    7. Justin Gallagher & Daniel Hartley, 2017. "Household Finance after a Natural Disaster: The Case of Hurricane Katrina," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 199-228, August.
    8. Matthew Wibbenmeyer & Sarah E. Anderson & Andrew J. Plantinga, 2019. "Salience And The Government Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1547-1567, July.
    9. Shafran, Aric P., 2008. "Risk externalities and the problem of wildfire risk," Journal of Urban Economics, Elsevier, vol. 64(2), pages 488-495, September.
    10. Richard Hornbeck & Suresh Naidu, 2014. "When the Levee Breaks: Black Migration and Economic Development in the American South," American Economic Review, American Economic Association, vol. 104(3), pages 963-990, March.
    11. Champ, Patricia A. & Meldrum, James R. & Brenkert-Smith, Hannah & Warziniack, Travis W. & Barth, Christopher M. & Falk, Lilia C. & Gomez, Jamie B., 2020. "Do actions speak louder than words? Comparing the effect of risk aversion on objective and self-reported mitigation measures," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 301-313.
    12. Patrick Baylis & Judson Boomhower, 2019. "Moral Hazard, Wildfires, and the Economic Incidence of Natural Disasters," NBER Working Papers 26550, National Bureau of Economic Research, Inc.
    13. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 1-19.
    14. Julie Mueller & John Loomis & Armando González-Cabán, 2009. "Do Repeated Wildfires Change Homebuyers’ Demand for Homes in High-Risk Areas? A Hedonic Analysis of the Short and Long-Term Effects of Repeated Wildfires on House Prices in Southern California," The Journal of Real Estate Finance and Economics, Springer, vol. 38(2), pages 155-172, February.
    15. Bleemer, Zachary & van der Klaauw, Wilbert, 2019. "Long-run net distributionary effects of federal disaster insurance: The case of Hurricane Katrina," Journal of Urban Economics, Elsevier, vol. 110(C), pages 70-88.
    16. David J. Kaczan & Jennifer Orgill-Meyer, 2020. "The impact of climate change on migration: a synthesis of recent empirical insights," Climatic Change, Springer, vol. 158(3), pages 281-300, February.
    17. V. Mueller & C. Gray & K. Kosec, 2014. "Heat stress increases long-term human migration in rural Pakistan," Nature Climate Change, Nature, vol. 4(3), pages 182-185, March.
    18. Mathew E. Hauer, 2017. "Migration induced by sea-level rise could reshape the US population landscape," Nature Climate Change, Nature, vol. 7(5), pages 321-325, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xudong An & Stuart A. Gabriel & Nitzan Tzur-Ilan, 2024. "Extreme Wildfires, Distant Air Pollution, and Household Financial Health," Working Papers 24-01, Federal Reserve Bank of Philadelphia.
    2. Meier, Sarah & Elliott, Robert J.R. & Strobl, Eric, 2023. "The regional economic impact of wildfires: Evidence from Southern Europe," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Justin Contat & Caroline Hopkins & Luis Mejia & Matthew Suandi, 2023. "When Climate Meets Real Estate: A Survey of the Literature," FHFA Staff Working Papers 23-05, Federal Housing Finance Agency.
    2. Marcel Henkel, Eunjee Kwon, Pierre Magontier, 2022. "The Unintended Consequences of Post-Disaster Policies for Spatial Sorting," Diskussionsschriften credresearchpaper37, Universitaet Bern, Departement Volkswirtschaft - CRED.
    3. Barbora Šedová & Lucia Čizmaziová & Athene Cook, 2021. "A meta-analysis of climate migration literature," CEPA Discussion Papers 29, Center for Economic Policy Analysis.
    4. Richa Richa & Ilan Noy & Subir Sen, 2024. "Extreme Weather and Inter-State Migration in India," CESifo Working Paper Series 10919, CESifo.
    5. Adriana Kocornik-Mina & Thomas K. J. McDermott & Guy Michaels & Ferdinand Rauch, 2020. "Flooded Cities," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 35-66, April.
    6. Katrin Millock & Cees Withagen, 2021. "Climate and Migration," World Scientific Book Chapters, in: Anil Markandya & Dirk Rübbelke (ed.), CLIMATE AND DEVELOPMENT, chapter 10, pages 309-341, World Scientific Publishing Co. Pte. Ltd..
    7. Johar, Meliyanni & Johnston, David W. & Shields, Michael A. & Siminski, Peter & Stavrunova, Olena, 2022. "The economic impacts of direct natural disaster exposure," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 26-39.
    8. Hazra, Devika & Gallagher, Patricia, 2022. "Role of insurance in wildfire risk mitigation," Economic Modelling, Elsevier, vol. 108(C).
    9. McCoy, Shawn J. & Walsh, Randall P., 2018. "Wildfire risk, salience & housing demand," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 203-228.
    10. Shawn J. McCoy & Randall P. Walsh, 2014. "W.U.I. on Fire: Risk, Salience & Housing Demand," NBER Working Papers 20644, National Bureau of Economic Research, Inc.
    11. Maya Moore & Dennis Wesselbaum, 2023. "Climatic factors as drivers of migration: a review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(4), pages 2955-2975, April.
    12. Xudong An & Stuart A. Gabriel & Nitzan Tzur-Ilan, 2024. "Extreme Wildfires, Distant Air Pollution, and Household Financial Health," Working Papers 24-01, Federal Reserve Bank of Philadelphia.
    13. Ivan Petkov, 2022. "Weather Shocks, Population, and Housing Prices: the Role of Expectation Revisions," Economics of Disasters and Climate Change, Springer, vol. 6(3), pages 495-540, November.
    14. Hjerpe, Evan & Kim, Yeon-Su & Dunn, Leah, 2016. "Forest density preferences of homebuyers in the wildland-urban interface," Forest Policy and Economics, Elsevier, vol. 70(C), pages 56-66.
    15. Shaikh M. S. U. Eskander & Sam Fankhauser, 2022. "Income Diversification and Income Inequality: Household Responses to the 2013 Floods in Pakistan," Sustainability, MDPI, vol. 14(1), pages 1-12, January.
    16. Els BEKEART & Ilse RUYSSEN & Sara SALOMONE, 2021. "Domestic and International Migration Intentions in Response to Environmental Stress: A Global Cross-country Analysis," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 87(3), pages 383-436, September.
    17. Michel Beine & Ilan Noy & Christopher Parsons, 2021. "Climate change, migration and voice," Climatic Change, Springer, vol. 167(1), pages 1-27, July.
    18. Maria Waldinger, 2015. "The effects of climate change on internal and international migration: implications for developing countries," GRI Working Papers 192, Grantham Research Institute on Climate Change and the Environment.
    19. Miles Parker, 2018. "The Impact of Disasters on Inflation," Economics of Disasters and Climate Change, Springer, vol. 2(1), pages 21-48, April.
    20. Boustan, Leah Platt & Kahn, Matthew E. & Rhode, Paul W. & Yanguas, Maria Lucia, 2020. "The effect of natural disasters on economic activity in US counties: A century of data," Journal of Urban Economics, Elsevier, vol. 118(C).

    More about this item

    Keywords

    wildfires; Migration; Consumer Credit;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcwq:93562. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: 4D Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbclus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.