California Under Fire
By: Emily Burk
Northern California, a huge tourist destination for wine-lovers, is bouncing back following the severe wildfires that broke out in early October of this year. These regions of Northern California are finding their homes and business destroyed, the death tolls high and rising, a shortage of skilled contractors, and the costs facing them to be insurmountable, both implicit and explicit. The wildfires have caused a great deal of damage for many citizens, and the economic challenges facing them are not helping. Overall, Northern California has a long road ahead, with many obstacles along they way, and will need the government’s help. California must work to rebuild their businesses and counties in order to keep the economy running and businesses open and making revenue. Here are some of the largest obstacles Northern California will face following this disaster.
In lieu of the severe damage and destruction of homes and business, the demand for skilled contractors is soaring, while the supply, already low before the wildfires, is facing a huge shortage. This plight, is only increasing the demand, allowing for a higher revenue for the construction workers available, given the shortage. Additionally, Northern California is also facing a shortage of lumber resources, given the fires and high variable costs for the resources needed to rebuild homes and businesses. These costs are only expected to keep rising. Due to the shortages, this is only driving the total cost for consumers and business up even higher.
Furthermore, the economic impact that the wildfires have on businesses in the wine counties such as Sonoma and Napa is huge. One source stated, “Napa also could see economic impacts due to its reliance on wine-related tourism. Several dozen wineries in the region were damaged or destroyed. In Napa Valley alone, visitors generated nearly $2 billion in spending in 2016,” according to research conducted by San Francisco-based Destination Analysts. With the destruction of businesses and tourism falling, business are losing revenue at a steady rate and facing both huge implicit and explicit costs. The costs alone to rebuild in those counties affected are taxing, but additionally the amount of time needed to rebuild their business is another challenge in and of itself, that will affect production and revenue of the business.
Overall, these wildfires have many more impacts that just putting people out of their homes. The destruction of businesses, loss of revenue and tourism, cost of rebuilding and the production following, and the effects of supply and demand on the situation, show that Northern California needs to gear up for an economic battle. Northern California will need government and local help in the rebuild effort in order to keep their economies afloat.
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Daniels, Jeff. “California Begins 'Historic Cleanup' from Fires but Faces Serious Hurdles in Rebuilding.” CNBC, CNBC, 26 Oct. 2017, www.cnbc.com/2017/10/26/california-begins-fire-cleanup-but-faces-serious-hurdles-in-rebuilding.html
Bonos, Lisa, et al. “Death Toll Continues to Rise as California Wildfires Burn On.” The Washington Post, WP Company, 15 Oct. 2017, www.washingtonpost.com/news/post-nation/wp/2017/10/14/more-californians-ordered-to-flee-as-gusting-winds-spread-wildfires/?utm_term=.1ca1b3d95e8f.