While it is premature to offer a definitive assessment of the economic effect of the B.C. wildfires, I wanted to share with you my preliminary thoughts about the financial consequences of this unprecedented catastrophe. I don’t want to be alarmist because we will recover. But we’ve taken, and continue to take, one heck of a hit.
I expect to be writing again about this issue, but for now I want to focus on three areas of economic concern: the cattle industry, tourism and farming. My sources for this commentary include the B.C. Cattleman’s Association, the Tourism Industry Association of B.C. and Handlers Equipment Ltd, a highly regarded an agricultural equipment distributor whose insights into the consequences of the wildfires on our farming industry are particularly perceptive.
Writing for The Canadian Press, Vancouver-based Linda Givetash noted that ‘ranchers
fleeing wildfires in British Columbia’s interior left behind an estimated 10,000 to 20,000 cattle, hoping the animals’ instincts will keep them safe.’ This was an early estimate and has since been revised upwards.
The head of the B.C. Cattleman’s Association, general manager Kevin Boon said that with so many fires springing up at once and cattle dispersed across properties for summer grazing, many ranchers didn’t have time to collect and move herds.
Boon observed that losing cattle can have a significant economic impact on ranchers, with breeding cows and their calves worth anywhere from $1,000 to several thousand dollars per head. Damage to infrastructure, such as fences, and loss of feed will also be costly for ranchers to replace.
Quoted in Business Vancouver, Boon said he’s not sure how many cattle have been affected by the evacuation orders and fires themselves, but estimates it’s somewhere between 25,000 to 30,000. He noted that one large ranch close to Ashcroft, which also has a dairy operation and a feed lot, has been hit particularly hard by a wildfire and already has an insurance claim estimated at more than $20 million.
Boon said the burnt grass should be back by next season. However, a lot of the infrastructure, including fences and corrals, across the province might be irreplaceable.
‘Things like those take a lifetime to build. They’re not something that they build every year, so it’s a large investment and a huge loss to them,’ said Boon. The provincial government announced last week that it will commit $6.2 million to support replacement of livestock fencing and Crown range infrastructure destroyed by wildfires.
The wildfires forced more than 60 provincial parks in central B.C. to close. The fires have obliged officials to close roads, including a part of the TransCanada Highway near Cache Creek.
Walt Judas, CEO of the Tourism Industry Association of B.C., said it’s difficult to say at this point how much damage the wildfires will inflict on the industry. Reported Dan Healing, The Canadian Press, Judas said: ‘Obviously, the longer it goes, the bigger the impact.’ For the time being, all Mr. Judas could share is that – until the wildfires struck – the tourism industry was on a ‘very healthy pace’ so far this year after posting record revenue of $15.7 billion last year.
Judas estimated about 130,000 people work in what is considered one of B.C.’s largest economic sectors. To put this situation into some kind of context, in 2003, wildfires in the province cost the B.C. economy $1.3-billion in direct fire suppression costs and indirect economic losses, according to a paper by the provincial Ministry of Forests, Lands and Natural Resource Operations. What we are facing now is considerably worse.
Handlers Equipment Ltd, an agricultural equipment distributor, has been posting regular bulletins on the impact of the wildfires and, as they point out, ‘smoke and ash from these fires has now travelled hundreds of kilometers, affecting people and livestock well out of the fire danger zone.’
The fact is that it’s too early to tally the financial impact of the wildfires on farming, though one of Handler’s bulletins points out that there is an upside to wildfires:
‘Coniferous forests have evolved to rely on wildfires for regeneration purposes. It cycles the nutrients and changes the moisture and temperature characteristics of the soil. Ash is organic matter that is suspended in the air. It is composed of many essential ingredients that plants require. When ash falls on your fields, your plants will absorb these nutrients such as potassium, calcium and magnesium. This can be beneficial and even act as fertilizer for your organics.’
The good news is that our environment and soil in B.C. is considered to be of the best in the world for growing produce. Says Handlers: ‘Part of the reason for this is the resilience of our soil and its ability to recover from natural (or unnatural) disasters such as the current wildfire situation.’
While this concluding comment is mildly reassuring, the bottom line on the overall economic impact of the B.C. wildfires on the cattle industry, tourism and farming is, right now, unknown and unknowable.
Geoff Funke, Senior Wealth Advisor, Scotia Wealth Management, 604.535.4721.