Fires in Los Angeles could set record $40b (CAD 58b) in damages

According to Cal Fire, over 12,000 buildings have been destroyed. Goldman Sachs analysts estimate that insurance losses could range from $10 to $30 billion (CAD 15 to CAD 44 billion). Total losses might amount to around $40 billion (CAD 58 billion), placing these fires among the most costly natural disasters in U.S. history.

The fires have affected the region's economy. Employment in the Los Angeles MSA dropped after the fires erupted on January 7. The growth of GDP in the U.S. in the first quarter of this year might be 0.2 percentage points lower, not including reconstruction costs.

Experts at Goldman Sachs do not anticipate a significant impact of insurance costs on inflation. The fires in Los Angeles County have a limited effect on prices outside of California. The home insurance index in the PCE inflation index is 0.1 percent.

The fires have scorched 15,600 hectares, and 88,000 people are still under evacuation orders. Another 84,800 people have received threat warnings.

The Los Angeles fires have become one of the most expensive environmental disasters in U.S. history, with losses estimated in the billions. These events underscore the increasing frequency and intensity of climate changes, leading to a crisis in the insurance market. Insurers are increasingly withdrawing from California, forcing residents to seek alternative solutions.

Fires in Canada are also causing losses in the oil sector, and production restrictions have reduced the region's GDP.

Extreme weather events are becoming the new norm, leading to severe economic consequences.

The EEA report emphasizes that in Europe, climate changes have cost nearly 400 billion euros (595 Canadian dollars). The intensification of extreme events, such as droughts and storms, generates significant losses, affecting the agricultural and water management sectors. Reconstruction costs are becoming a challenge for state budgets.