Working Paper

Extreme Wildfires, Distant Air Pollution, and Household Financial Health

Abstract: We link detailed wildfire burn, satellite smoke plume, and ground-level pollution data to estimate the effects of extreme wildfire and related smoke and air pollution events on housing and consumer financial outcomes. Findings provide novel evidence of elevated spending, indebtedness, and loan delinquencies among households distant from the burn perimeter but exposed to high levels of wildfire-attributed air pollution. Results also show higher levels of financial distress among renters in the burn zone, particularly those with lower credit scores. Financial distress among homeowners within the fire perimeter is less prevalent, likely owing to insurance payout. Findings also show out-migration and declines in house values in wildfire burn areas. The adverse smoke and pollution effects are salient to a substantial geographically dispersed population and add appreciably to the household financial impacts of extreme wildfires.

Keywords: Wildfires; Air Pollution; Consumer Credit; Financial Distress; Spending;

JEL Classification: R23; Q53; Q54; D12;

https://doi.org/10.21799/frbp.wp.2024.01

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2024-01-03

Number: 24-01