Economic and Social Reports
Estimates of gross domestic product in wildfire-affected areas during the 2023 and 2024 wildfire seasons

by Search for Statistics Canada publications by Matthew Brown, Matthew Brown , ORCID for Matthew Brown and Mark Brown

DOI: https://doi.org/10.25318/36280001202500600004-eng

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Abstract

This article reports experimental estimates of the economic activity at risk in wildfire-affected areas during the 2023 season and in 2024 with a focus on Jasper, Alberta. The paper uses a business-level dataset, burned-area perimeters and evacuation data to determine business operating locations that were likely affected by wildfires from May to September 2023, providing a geographic overview of estimated business sector output that might have been affected. Focused estimates for the regions of Yellowknife, Kelowna, Halifax, Edson, and Jasper are presented. While gross domestic product at risk of being affected by the 2023 wildfire season appears low when measured at the national level, a localized analysis reveals that the effects on local economies are much more pronounced, underscoring the importance of geographic scale in interpreting the economic impact of natural disasters.

Authors

Matthew Brown and Mark Brown are with the Economic and Social Analysis and Modelling Division, Analytical Studies and Modelling Branch, at Statistics Canada.

Acknowledgments

The authors would like to thank their colleagues at Statistics Canada—Marie-Hélène Archambault and Yann Pelcat—for their invaluable data support and feedback. They would also like to thank their colleagues at Public Safety Canada and Natural Resources Canada, who provided additional feedback for this research. In particular, they thank Jamie Sandison, Data Science and Engineering Team, Public Safety Canada and Amélie Lafrance-Cooke, Statistics Canada for their detailed comments.

Introduction

Preliminary estimates suggest that the 2023 wildfire season caused approximately 232,000 people to evacuate their communities over 282 events, consequently causing disruption to economic activity for many businesses (Jain et al., 2024).^Note  This article discusses the amount of economic activity that was at risk of being affected, but not necessarily disrupted, by wildfires across Canada during the 2023 wildfire season. It focuses on selected regions that were most impacted—Yellowknife, Kelowna, Halifax and Edson—while also providing an overview of potentially impacted economic activity by province and nationally. The 2024 wildfire season is also briefly discussed, with a focus on Jasper, Alberta. The economic activity in wildfire-affected areas are calculated using experimental estimates aimed at measuring economic activity at the fine-grained scales that match where fires have occurred. As such, it establishes a basis for timely estimates of economic activity at risk from wildfires and a foundation for measuring their potential longer term impact on economic activity.

The 2023 wildfire season in Canada broke records as the most destructive season ever recorded, with over 6,000 fires that burned a total of 16.5 million hectares of land (Natural Resources Canada, 2023).^Note  For perspective, the burned area was larger than the combined land area of New Brunswick, Nova Scotia and Prince Edward Island. The provinces and territories with the most total hectares burned—Quebec, the Northwest Territories, Alberta, British Columbia and Saskatchewan—had total numbers of evacuees ranging from 5,000 in Saskatchewan to 59,000 in British Columbia (Internal Displacement Monitoring Centre, 2024). Furthermore, 5 of the top 10 largest evacuation events ever recorded in Canada occurred in 2023 in the following areas: Yellowknife, Northwest Territories; Kelowna, British Columbia (West Kelowna and Kelowna); Halifax, Nova Scotia; and Edson, Alberta (Jain et al., 2024). Wildfires caused an estimated $945 million in insured damages to the areas of Okanagan and Shuswap in British Columbia, Behchokǫ̀-Yellowknife and Hay River in the Northwest Territories, and Tantallon and Hammonds Plains in Nova Scotia (Insurance Bureau of Canada, 2024).

A map of the total wildfire-affected area is shown in Figure 1. This map was generated by combining multiple wildfire datasets representing locations that were directly affected by wildfires, including burned areas and locations that were affected by evacuation orders (see notes in Figure 1). The map demonstrates the substantial geographic range of wildfire-affected areas, which were found in every province and territory during the 2023 season.

Measuring the economic activity in wildfire-affected regions

This article provides experimental estimates of economic activity in and around areas that were directly affected by wildfires—specifically, the gross domestic product (GDP) of businesses. The concept of GDP is inherently linked to the location where production occurs. To estimate GDP, industries must have operating locations that are accurately aligned with the location of production to be considered in scope. As a result, this analysis excludes several industries, such as natural resource extraction, for which business-level data are captured at corporate office locations rather than extraction sites. A list of in-scope industries is presented in Table A1 (Appendix A). Notably, in addition to natural resource extraction, network-based industries (e.g., trucking) are not included in the analysis for similar reasons.

To estimate the amount of economic activity at risk of being affected by wildfires, it is necessary to determine the businesses that were potentially affected, and the value of production represented by those businesses. In this analysis, affected businesses are defined using a combination of data sources. First, a geographic boundary dataset of wildfire perimeters for the 2023 season was obtained. This dataset was then augmented using the National Burned Area Composite to improve accuracy (Canadian Forest Service, 2024; Natural Resources Canada, 2024). Additionally, provincial and municipal reports of evacuated areas were used to manually adjust boundaries. These combined data boundaries are assumed to indicate the areas where business locations are most likely to have been affected by wildfire disruptions. To determine the value of production that was potentially disrupted, business-level data are used.^Note  These data directly measure GDP for single-location (typically small) businesses and estimate it for larger, multi-location businesses using available information such as employment at the location level to spread business-level GDP to individual operating locations. Because the source data used to create the dataset are only available with a lag, the most recent feasible year of data, 2019, is reported here. While it does not correspond with the years the wildfires occurred, the geographic patterns of GDP in 2019 will provide a reasonably accurate measure of the share of output affected because they are highly persistent over time.^Note 

To estimate the dollar value of economic activity at risk of being affected by wildfires, the geolocated business-based information is combined with geographic coordinates from Statistics Canada’s Statistical Business Register, as well as the Statistical Building Register, to determine business operating locations. These geolocated operating units are aggregated into 1 km x 1 km grid squares and then combined with the wildfire boundaries described previously to generate an estimate of how much GDP may have been directly affected. To further improve the accuracy of the estimate, media reports and municipal evacuation orders were used to improve the delineation of the borders defining the affected area in the analysis.

This approach, as noted in a related work by Bemrose & Macdonald (2022), should be interpreted with caution, as the business-level estimates may produce over- or underestimates at the scale of fine geographies, especially in rural areas.^Note  Therefore, the presented estimates should be seen as a general indication of the economic disruption’s size and not an exact measure of its impact.

Economic activity in wildfire-affected areas

When measured at a national scale, the total amount of business activity in wildfire-affected areas accounted for less than 1% of the total measured GDP of Canada for in-scope industries. Although this disruption may appear modest when measured nationally—especially compared with major recent economic disruptions like the COVID-19 pandemic—it is important to examine finer geographies to reveal potential localized effects. Chart 1 presents the share of GDP in each province and territory that was potentially affected by the wildfires and related evacuations. As this chart illustrates, not all provinces and territories were affected equally. For example, in the Northwest Territories, approximately 74% of GDP was in wildfire-affected areas, largely because Yellowknife—where nearly half of the territory’s population lives—faced an evacuation order. Comparatively, in every province in the country that experienced wildfires, less than 1% of their total GDP was in the affected areas.

These percentages increase significantly at the regional scale because the affected location can constitute a significant portion of the local geography’s GDP. For example, businesses that were potentially affected by the evacuation order for Edson, Alberta, and surrounding areas accounted for approximately 10% of the GDP of the economic region (ER) that they are a part of (Banff–Jasper–Rocky Mountain House). This ER includes numerous other towns, some of which served as evacuee reception centres. Figure 2 presents maps of the GDP in wildfire-affected areas to highlight local differences in towns and cities across Canada. In these maps, each grid square represents a grouping of business operating locations within the 1 km2 area it covers. Each grid square is coloured by the amount of GDP generated by the businesses within it, organized into quintiles. The quintiles are calculated individually for each map panel for the town or city being shown to highlight local variation (i.e., the data are divided into equal groups, each containing 20% of the observations, and yellow grid squares represent businesses in the top 20% of GDP output for a given town or city).

To provide an understanding of GDP in wildfire-affected areas in a local context, each panel of Figure 2 should be interpreted individually because, for instance, the top GDP quintile grids in Kelowna will not have the same dollar value range as the top GDP quintile grids in Yellowknife. For both the Kelowna and the Upper Tantallon maps, the number of grid squares in affected areas is much lower than that of grid squares outside affected areas, while in Yellowknife and Edson, the entire local land area of the inhabited regions was potentially affected.

For a quantitative perspective on these maps, the percentages of potentially affected GDP relative to the total GDP of the parent province and ER are presented in Table 1.^Note 

Table 1 demonstrates that Yellowknife had the highest total proportion of GDP at risk, with 62.1% of the territorial total having been in wildfire-affected areas (see area affected in Figure 2). This result is explained by the fact that nearly half of the population of the Northwest Territories resides in Yellowknife, where all residents were under an evacuation order from August 16 to September 6, 2023. The percentages of GDP at risk were less dramatic in other selected locations, but still significant. For example, the Upper Tantallon and Hammonds Plains wildfire, which led to an evacuation order for residents in late May 2023, potentially affected approximately 1.1% of the GDP of the Halifax ER, while the West Kelowna and Kelowna wildfires are estimated to have potentially affected 1.8% of the GDP of the Thompson–Okanagan ER. Wildfires in and around the town of Edson, Alberta, affected approximately 10% of the GDP of its parent ER. Additionally, an estimate is provided for the Jasper, Alberta, area affected by wildfires during the 2024 season, which caused an evacuation of more than 20,000 people from July to August 2024 (Municipality of Jasper, 2024). Here, an estimated 7.9% of the GDP of the Banff–Jasper–Rocky Mountain House ER was at risk (this ER also includes Edson, which was evacuated in 2023, but not in 2024).

Overview of evacuation timelines and specific estimates

While Table 1 shows how important the economies of the affected areas were within their respective regions, it does not give a sense of the degree of disruption. This is addressed in Table 2, which presents the number of days that the affected areas were evacuated for. For evacuations that last a few working days, it is conceivable that economic output could be made up within the month or year. Lost manufacturing output can be made up through overtime or by temporarily hiring additional staff. Retail purchases can be made later, or a visit to the dentist can be rescheduled. By contrast, longer evacuations are much harder to make up, particularly if most of the community has been evacuated. Indeed, there is empirical evidence that a significant portion of businesses, particularly small businesses, can struggle to recover from disruptions caused by natural disasters (Chang et al., 2022; Ha, Childs, Kim, & Fairhurst, 2022).

In relative terms, three areas stand out regarding the length of evacuation—Yellowknife and Kelowna in 2023 and Jasper in 2024. For each of these three areas, over half of the working days in a month were lost, with 6% or more of working days lost on an annual basis. Moreover, for Yellowknife and Jasper, a larger percentage (or all) of the local economy was effectively shut down during the evacuation period.

Limitations

The values presented in this paper are experimental and should not be interpreted as a comprehensive measure of actual economic impacts. It will take time to fully realise the longterm economic effects of the wildfires, which will depend on the duration of the evacuations and how much property was damaged or destroyed. The dataset that was used includes only businesses in industries where production can be accurately located at their operating locations. Hence, GDP for resource extraction and utilities is not taken into consideration, and these industries may be very important for the economies covered. Additionally, losses attributable to transportation network disruption are not fully accounted for, although efforts were made to capture major transport disruptions, such as the closure of Highway 4 on Vancouver Island in June 2023. This closure disrupted highway access to Tofino, Port Alberni, Ucluelet and other communities and likely impacted GDP.

More broadly, there are also capital losses that were not accounted for in the analysis but may impact future capacity to produce goods and services. For example, loss of both natural (e.g., hectares of commercial forest land burned) and physical (e.g., residential and commercial buildings that were damaged or lost) capital is not captured in the analysis. The analysis also does not account for residents who were able to work remotely. Future modelling work could be done to provide more specific assessments of damages caused or mitigated by these factors.

Business data were geocoded using the best accuracy available for each business. While 83% of GDP was geocoded at the building level (i.e., the centroid of the operating location premises), 15% was geocoded at the block-face level of geography. The remaining 2% of GDP was geocoded at either the representative point level (the centroid of the finest census geography available) or the postal code level. However, for some businesses, especially those in rural locations, the best level of available geolocation is still at the postal code level. Because postal codes can cover very large land areas in rural locations, it is possible that the estimates provided are not capturing these cases (e.g.,the representative point is outside the wildfire-affected area, while the actual location of economic activity is within it), resulting in an understating of the level of GDP at risk from wildfires.

Conclusions

Given the changing climate, wildfire risk will likely continue to increase into the future (Erni et al., 2024). The 2023 season was the largest ever recorded by land area affected, and the 2024 season was the second largest recorded in the past two decades (Omstead & The Canadian Press, 2024; Williams, 2024). Therefore, it is critical to understand wildfire effects from a variety of perspectives. In this paper, the value of production (defined here as GDP of business sector industries at production sites) in areas that were directly affected by wildfires in 2023 was assessed across Canada, and in the Jasper area in 2024. Although the wildfires affected large areas of land across the country, their potential effects on overall GDP are relatively limited at a national or provincial or territorial scale (except for the Northwest Territories, where Yellowknife was evacuated in 2023). However, for smaller places that were affected, these impacts are potentially quite large at the local scale, particularly for those that experienced longer evacuation periods.

Appendix A

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