Estimates LA Fire Damages Swing From $50B to $275B

The estimated cost of economic damage from L.A. County firestorms last week ranged from $36 billion to $275 billion — in other words, all over the fire destruction map.

While some forecasters say it’s too early to peg the damages from the wildfires last week that destroyed an estimated 12,000 structures and killed at least 25 residents, others have drawn headlines for their spiraling financial figures, the Orange County Register reported.

Weather forecaster AccuWeather drew buzz — and raised eyebrows — for its firestorm damage tally of between $250 billion and $275 billion — up to four times as high as other estimates.

“Many families will face significant unexpected costs to relocate to another area in Southern California,” Jonathan Porter, AccuWeather’s chief meteorologist, said in a statement. “The recovery process will be extremely expensive and emotionally challenging in the months and years to come.”

Two local economists scoffed at AccuWeather’s numbers quoted by cloud experts with little knowledge of burned out homes and businesses on the ground.

“Their loss estimates are about as good as their weather forecasts,” Chris Thornberg of L.A.-based Beacon Economics, citing a page from the weather service’s website calling for minimal winds in Los Angeles on what others feared would be a gusty day, told the Register. “It’s all about catastrophism.”

Thornburg estimates the cost of wildfire damage to 12,000 structures will run $3 million each to fix, for a total of $36 billion. Add in firefighting expenses and the cost of environmental clean-up, relocations and infrastructure repairs, and economic damages will be “probably a bit less than $100 billion,” he said. “So, a mid-sized hurricane.”

“I think that AccuWeather needs to stay in their lane,” Mark Schniepp of The California Economic Forecast, who thinks it’s way too early for credible estimates, told the newspaper. “In past fires, I’ve experienced wild exaggerations of the number of structures destroyed daily while the fires still raged.”

J.P. Morgan initially put the damages at $10 billion, then doubled it to $20 billion. And a day later, they redid the math to $50 billion.

But how accurate can any damage estimate be when the flames aren’t even snuffed out? columnist Jonathan Lansner of the Register asked.

A key number driving these estimates are damaged or destroyed structures. One source of those numbers, Cal Fire, admits its initial estimates are rough guesses.

“These numbers are preliminary based on aerial assessments dedicating heat sources which can include chicken coops, outbuildings, sheds, water containers, fifth wheels, etc.,” Cal Fire said. The estimates are then “ground-verified by damage assessment teams.”

As of Jan. 15, preliminary reports by Cal Fire listed more than 12,000 L.A. structures touched by flames, but its verification had found 6,818 structures destroyed and 883 damaged.

“While it is too early to assess insured losses in detail from the Los Angeles wildfires, it’s already clear that this is a major insured and economic loss,” corporate credit watcher Moody’s wrote on Jan. 10.

Three days later, real estate tracker CoreLogic estimated 16,636 properties in the path of the fires that would cost $13 billion to rebuild.

“Not all properties within the fire perimeter are necessarily damaged by fire,” CoreLogic wrote. “Additionally, properties that are impacted may not have sustained damage equal to their full reconstruction cost value.”

Comparing financial industry loss estimates against AccuWeather’s “holistic math” may be a case of apples to oranges, where AccuWeather counts every fruit and vegetable, according to the Register, which pointed to its soaring damage estimates for hurricanes.

“The damage and suffering from hurricanes and extreme weather are often much greater than what is initially reported and what insurance typically covers,” AccuWeather founder Joel Myers wrote in a 2024 weather-damage wrap-up.

It may take years to come up with an accurate tally after the ashes and debris are cleared away.

The financial bottom line: cleanup, reconstruction and relocations — whether paid by insurers, government or citizens — can boost the afflicted area’s business climate.

“With few exceptions, such episodes are characterized by a temporary dip in employment and consumption, followed by a surge in economic activity fueled by recovery spending,” Thornberg, an economist citing years of disaster data, told the Register.

— Dana Bartholomew