Hawaii’s economy has experienced significant losses, estimated between $4 billion and $6 billion, as a result of the devastating wildfires that ravaged several regions of Maui this month. The Lahaina conflagration and Kula wildfires, which occurred in early August, burned approximately $2.5 to $4 billion worth of insured properties in the state, according to risk-modeling company Moody’s RMS. The assessment, released on Tuesday, takes into account the direct and indirect losses caused by the fires, which consumed around 2,170 acres or 3.4 miles of land. Tragically, the catastrophe has resulted in over 100 confirmed deaths, leaving more than 1,000 people still unaccounted for.
Moody’s arrived at its estimate of Hawaii’s economic losses by utilizing building-level damage assessments from multiple sources, as well as damage maps provided by the Maui Emergency Management Agency. However, the estimate does not consider the impact of the wildfires on the state’s gross domestic product, the government’s spending on the response to the catastrophe, or the social cost of the fires, which have forever changed the lives of families and communities.
The disruption to tourism is another significant factor contributing to the economic losses incurred from the fires, as reflected in Moody’s estimates. Beyond the businesses directly affected by the fires, there are also numerous businesses indirectly impacted. Small businesses located in safe areas of Maui are still open, but they are suffering from a decline in tourist dollars due to travel warnings and cancellations. Restaurant owner Nutcharee Case emphasized the importance of tourists visiting the island, as it supports locals who have been affected by the wildfires. Case has been providing free meals to wildfire survivors in Lahaina, which is approximately 22 miles away.
Approximately 70% of Maui’s economy is generated through tourism, either directly or indirectly, according to the Maui Economic Development Board. Rebuilding after the devastating wildfires is projected to cost over $5.5 billion, according to officials. Fortunately, insurance is expected to cover at least 75% of the economic damage, as Hawaii has high insurance penetration rates and policies typically cover wildfire damages. However, “extenuating factors” such as potential supply-chain issues and the impact of inflation on construction prices could drive up the cost of losses even higher than the estimates covered by insurance.
In conclusion, the wildfires in Maui have caused significant economic losses for Hawaii, ranging from $4 billion to $6 billion. The destruction of insured properties, the loss of lives, and the disruption to tourism have all contributed to the scale of this economic impact. Rebuilding efforts are estimated to exceed $5.5 billion, with insurance expected to cover a substantial portion of the damage. However, additional factors such as supply-chain challenges and inflation may further increase the financial burden.
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