The deadly wildfire on Maui that devastated the town of Lahaina and left catastrophic damage in their wake delivered a multibillion-dollar hit to the island’s economy according to a new economic analysis.
The wildfire, which started in early August and expanded rapidly because of winds from an offshore hurricane, swept through the town of Lahaina, a tourist hotspot that had an estimated population of 12,000 people. The wildfire is responsible for at least 99 deaths, making it the deadliest to occur in the U.S. in over a century, and search efforts continue for the hundreds who remain missing as of Tuesday.
"Obviously, the foremost issue is the human toll and that seems like it’s going to tragically get much worse," Adam Kamins, a senior regional economist with Moody’s Analytics, told FOX Business.
An initial estimate by Moody’s Analytics of the damage caused by the wildfires puts the economic toll in a range of $3.5 billion to $7 billion. Of the total, about $3 billion to $6 billion is derived from property damage, while up to $1 billion of the total reflects lost output. Kamins said it represents a "very significant economic shock locally" to Maui’s roughly $10 billion economy.
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The economists arrived at that range based on preliminary estimates of structures and other property destroyed in the wildfire. Housing in Maui is relatively expensive, with median single-family home prices around $1 million, while a number of hotels, retail shops and other businesses were damaged or destroyed in the disaster.
When combined with the destruction of vehicles and other infrastructure, it brings the total estimated property damage above $3 billion. Kamins noted that the range is intended to be preliminary and added, "It’s pretty wide for reason, and we expect that as details become clearer, and we have a better sense as insurance assessors go in that we’ll know with more precision what the number is."
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Kamins explained that for part of the lost output figures, Moody’s Analytics looked at the total output associated with a region and different industries based on assumptions about businesses being shuttered or forced to operate without power or things like cellular and internet service that could impact operations.
"The other part, in this case, was specifically looking at tourism because that is the lifeblood of the economy in Maui," Kamins said.
The tourism industry is the primary driver of Maui’s economy, as tourist-oriented businesses employ about 75% of Maui’s private sector jobs according to the Maui Economic Development Board. In the near term, the Hawaii Tourism Authority has asked non-essential visitors to depart the island and for any tourists planning trips to postpone their visit.
Lost output could have a tangible impact on economic activity in Hawaii, particularly in Maui, for Q3 and Q4 as losses accrue. Kamins said Maui’s ability to accommodate visitors will be limited in the coming weeks and months which could result in a decline in output of about 5% over the course of a year or 10% through the remainder of 2023.
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Aside from tourism, Kamins noted that the logistics industry is a fairly significant driver of Maui’s economy through air cargo and seaports, while the agriculture sector also plays a notable role, although it is unclear to what degree businesses in those sectors have been affected by the disaster.
FOX Weather’s Hillary Andrews contributed to this report.
