Wildfires continue to threaten Fort McMurray neighbourhoods on Wednesday, May 4, 2016. (photograph by Chris Schwarz/Government of Alberta)

Although it is much too early to say what the final economic costs of the Fort McMurray wildfire will be, it is certain it will be in the billions of dollars.

Short-term costs, such as property loss and emergency services, are fairly straightforward. Setting aside the obvious emotional toll, the longer term financial costs are more difficult to quantify.

Both the public and private sectors suffer immediate losses from the fire. For the public sector, the cost of wildfire suppression, transportation, security and disaster relief is immediate and high. The private sector costs are wider-ranging and cover losses for residents and businesses.

Loss of personal possessions, property, and employment are immediate. Businesses experience a loss of customers or production that reduces earnings. Public and private utilities and infrastructure are important community assets and the loss of these can set back community rebuilding.

Living through a major disaster has lasting, long-term effects on people. More resources are needed from the public and private sectors for health and human services. For the environment, there will be costs associated with forest rehabilitation, water quality, and species and their habitat. Depending on the characteristics of the area, longer-term public and private costs are tied to rebuilding tourism and recreation facilities and reputation.

Short-term effects from the wildfire on Alberta and Canada’s economy will be seen in the next data release from Statistics Canada. Production has been reduced indefinitely, as oilsands companies join in the wildfire fight and work with skeleton staffs. Pipeline companies have shut down some pipelines in response to reduced volumes and safety concerns.

Experience from the Slave Lake fire indicates GDP for the oil and gas sector declined 0.5%. When Statistics Canada reports May gross domestic product data, we can expect to see a drop in the oil and gas sector both nationally and provincially.

Oil sands producers have already shut in or reduced production by an estimated one million barrels a day. Bank economists have begun revising downward growth projections for the next month but expect that to be reversed in the coming months.

Depending on how soon companies can get people back to work, we may see a continued lower level of economic activity over the next few months. Longer-term, when rebuilding begins, spending on construction and repair of homes, businesses and infrastructure will then boost economic activity.

More importantly, thousands of Fort McMurray workers are out of work. Some workers will have jobs to go back to but will not have homes.

April employment numbers from Statistics Canada indicate Alberta lost 21,000 jobs. When next month’s employment numbers are released, we can expect to see the impact of the wildfire on jobs. These losses will be shared with other provinces as non-resident workers return to their home provinces.

The thousands of Fort McMurray residents who are out of work will need some form of income assistance while they figure out what to do next. This could come from their personal savings, employment insurance, disaster relief or other social programs. The Alberta government is providing immediate cash assistance of $1,250 for each adult and $500 for dependents for an approximate total cost of $100 million.

More important are the long term effects on Fort McMurray residents. A town can be rebuilt, but the loss and the trauma will go one for everyone involved. The burden on the province should be borne lightly.

BMO has provided a preliminary property insurance estimate of the damage range from $2.6 billion to $4.7 billion, based on the lessons of 2011 but suggests the value could be as high as $9 billion.

Disaster relief in the form of financial assistance to residents and their families will be available but the total need and ultimate value is unknown. Insurance claims from the Slave Lake fire in 2011 resulted in insurance claims of almost $750 million and $289 million in disaster emergency assistance, the highest-cost wildfire in Canada to date.

Harder to quantify are other types of losses such as businesses that may decide not to rebuild. If these businesses were already hurt by the economic downturn they may decide not to return.

Janice Plumstead is a Senior Economist with the Canada West Foundation

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