The devastating January wildfires in Los Angeles County could cost the local economy as much as $9 billion over the next five years, according to a new study by the Los Angeles Economic Development Corporation. The report examines the long-term financial impact of the blazes, particularly the Palisades and Eaton Fires, which left entire communities in ruins.
Southern California saw more than a dozen wildfires in January, with the Palisades and Eaton Fires causing the most significant destruction. The fires burned over 40,000 acres, destroyed or damaged thousands of structures, and claimed at least 27 lives. Some estimates suggest these fires could become some of the costliest natural disasters in U.S. history, with total damages potentially exceeding $250 billion.
Property damage alone is estimated to be between $28 billion and $54 billion. However, the economic impact extends far beyond property loss. Businesses destroyed in the fires will take years to rebuild, and their prolonged closures will ripple through the local economy.
The study assessed three recovery scenarios, estimating potential economic losses from 2025 to 2029. Even in the best-case scenario, the county could lose $4.6 billion. In the slowest recovery model, losses could reach $8.9 billion, along with nearly 50,000 job-years lost—equivalent to 50,000 full-time jobs for a year. Government tax revenue could also take a hit, with up to $1.41 billion in losses over five years.
The fires’ impact isn’t limited to just the burn zones. The report highlights concerns about displaced residents leaving the area, disruptions to supply chains, and rising construction costs, all of which could stall economic recovery across Southern California. The tourism industry, a vital part of LA’s economy, may also suffer as visitors hesitate to travel to fire-affected areas.
Experts predict it could take anywhere from four to ten years for the region to fully recover. Los Angeles Mayor Karen Bass announced this week that initial cleanup efforts in the Palisades Fire zone were completed ahead of schedule, and the EPA confirmed similar progress in the Eaton Fire zone. However, it remains uncertain whether this pace of recovery will continue.
As the county grapples with the aftermath, the success of rebuilding efforts will largely determine the long-term economic impact of these devastating fires.
