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Up in Smoke: The Impact of Wildfire Pollution on Healthcare Municipal Finance

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Abstract

Wildfire smoke pollution is associated with significantly higher healthcare municipal borrowing costs, amounting to $250 million in realized interest costs for high-smoke counties in 2010–2019, and an estimated $570 million over the following 10 years. These costs are disproportionately higher in high-poverty or high-minority areas where there is more smoke-related uncompensated care. Out-of-state smoke is also associated with higher borrowing costs, suggesting poor wildfire management imposes externalities on nearby states. Our hospital-level analysis shows increases in asthma cases and unprofitable emergency room visits, tighter financial constraints and reduced investment. Migration sorting exacerbates these effects by concentrating vulnerable households in high-smoke counties.

Suggested Citation

  • Luis Lopez & Dermot Murphy & Nitzan Tzur-Ilan & Sean Wilkoff, 2025. "Up in Smoke: The Impact of Wildfire Pollution on Healthcare Municipal Finance," Working Papers 2503, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:99473
    DOI: 10.24149/wp2503
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    Keywords

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    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-

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