Last month’s Palisades and Eaton wildfires caused between $28 billion and $53.8 billion in property damage, with business disruptions projected to result in economic losses of up to $8.9 billion in Los Angeles County alone over the next five years, according to a study published Thursday.
The report commissioned by the Southern California Leadership Council and the LA County Economic Development Corporation studies the impacts of the destruction and economic havoc caused by the fires and offers data-driven recommendations to guide recovery efforts.
The study estimates that the fires could lead to up to 49,110 job-years lost and reductions in labor income of up to $3.7 billion, while federal, state and local governments could experience tax revenue losses ranging from $730 million to $1.4 billion.
The report looks at the economic damage and personal toll of the fires and discusses the need for investing in prevention and recovery, former state Gov. Gray Davis, SCLC co-chair, said during a virtual press conference.
“Speed matters in the recovery process … particularly from an economic perspective,” Davis said. “Job No. 1 is to help people rebuild and get back to their new homes. … We have to learn the lessons of this fire and previous fires. We have to build homes better … so we don’t repeat this terrible tragedy. … Let’s learn the lessons.”
The study analyzed the fires’ impact on key industries, with retail trade, health care, professional services, construction, and educational services among the hardest hit. Disruptions to supply chains and workforce displacement could further compound the region’s economic challenges, the report said.
LA County Supervisor Kathryn Barger said the disaster “has left lasting scars on our community” and the entire region — “not only in terms of physical destruction but in economic hardships.”
Echoing Davis’ comments, Barger said the county’s best path forward is expediting issues surrounding the rebuilding process. “I am laser-focused on streamlining” those issues, she said.
Stephen Cheung, president and chief executive of LAEDC, said a best-case scenario would be recovery by 2029, but the process could take many more years. The impact of the fires would grow with the length of the recovery period, he added.
Steps toward recovery, according to the report, include fast-tracking rebuilding efforts through coordinated permitting processes and financial incentives, can reduce recovery timelines by up to 50%, strengthening fire-prone communities with improved emergency response systems, microgrids and fire-resistant construction materials and methods as required in California’s current building codes.
Also, implementing alternative insurance models, such as parametric insurance, can ensure faster financial relief for affected businesses and homeowners. Parametric insurance pays a set amount based on the magnitude of the event, rather than the magnitude of the losses in a traditional indemnity policy.
Researchers further suggest direct support be provided to impacted businesses and displaced workers through grants, training programs and small business recovery initiatives to prevent long-term economic decline, the report says.
According to the report, establishing multi-agency wildfire task forces with clear recovery roadmaps can also cut response times and improve post-disaster efficiency.
To access the full report, go to laedc.org/wpcms/wp-content/uploads/2025/02/LAEDC-2025-LA-Wildfires-Study.pdf, or read it below.