The Camp Fire, the Lahaina Fire, and Beyond: Impacts of Severe Wildfires on Households' Financial Health

Using US credit history data, this paper examines consumer credit use and financial health among people whose neighborhoods suffered destructive wildfires. We first estimate the impacts on consumer credit measures for people affected by the two most severe wildfires: the 2018 Camp Fire and the 2023 Lahaina Fire. Individuals in neighborhoods impacted by these two fires exhibit declines in their mortgage balances, as their mortgages are prepaid in many cases, and their residential moves increase. Their credit card balances also fall compared to the balances of people in nearby neighborhoods. We then extend the analysis to 100 other severe fires that occurred between 2005 and 2020. These other fires, which destroyed a smaller portion of the structures in affected neighborhoods, were followed by lower rather than higher residential mobility. Our estimates show that mortgage balances decline relative to those of the control group following the major fires ranked 3rd through 35th. Considering the precision of our estimates, we cannot rule out economically significant increases in households' financial distress associated with delinquencies, bankruptcies, or foreclosures.