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

RePEc Short ID: ptz21
ORCID iD: 0000-0001-9247-5502

Lopez, Luis; Murphy, Dermot; Tzur-Ilan, Nitzan; Wilkoff, Sean

doi:10.24149/wp2503

Working Paper

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

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.

Keywords: municipal bonds; wildfires; smoke; air pollution; climate finance; externalities;

JEL Classification: R31; O18; N32;

https://doi.org/10.24149/wp2503