The Economic Impact of the 2016 Loma Fire

Developed by Earth Economics and requested by the Santa Clara Valley Open Space Authority (OSA), this report offers an assessment of the comprehensive economic impact of the 2016 Loma Fire that occurred in the Santa Cruz mountains of California. The report details the cost of lost ecosystem services, and the process of assessing these costs. Earth Economics also provides recommendations for mitigating future fire-related risk. The OSA requested this analysis in order to better understand the true costs of wildfire events, and how management practices and policies can be modified to reduce overall risk as climate change increases the incidence and intensity of wildfire events.

In September 2016, the Loma Fire destroyed 12 homes and burned over 4,400 acres in a part of the Santa Cruz Mountains in southwestern Santa Clara County along the border with Santa Cruz County. The report estimates that the total cost of the fire was between $29 million and $34.5 million, including lost ecosystem services, fire suppression and response efforts, and damage to homes and infrastructure. However, the report cautions that this estimate is likely lower than the actual costs, due to the lack of data that was obtainable and the fact that future impacts like erosion and landslide could still occur as a result of fire scarring.

Earth Economics utilized a natural capital framework to evaluate the economic value of the built and natural systems that were lost as a result of the Loma Fire. The assessment involved estimating values for 39 different land cover - ecosystem service combinations that were known to exist in the region prior to the burn. The estimates utilized existing peer reviewed studies of valuation for distinct ecosystem services, such as climate stability, stormwater retention, habitat, water filtration, and more. The losses in ecosystem services were then estimated based on known burn severity and other data; ultimately the assessment estimated that the Loma Fire resulted in a 21% loss in annual ecosystem service value.

The assessment is intended to improve understanding of the full economic costs of wildfire events - particularly in terms of quantifying value lost from ecosystem services like flood mitigation, carbon sequestration, and other services that are traditionally difficult to understand and quantify. The assessment also included recommendations for OSA, the State of California, and other resource managers to reduce fire risk in light of climate change, such as:

  • Allocating funding for watershed restoration to improve forest health and water quality,
  • Establishing homeowner payment programs to incentivize best practices that reduce fire risk,
  • Creating collaborative governance programs to incentivize regional adoption of best practices, and
  • Considering buyouts of high-risk homes,
  • among other recommendations.

The Santa Clara OSA was able to use information from this assessment to inform its requests for state funding for recovery and restoration efforts following the Loma Fire.

Publication Date: 2017

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