Climate change-driven wildfires could cost Canada and the global economy trillions of dollars over the coming decades, with a new study warning that the financial consequences could become significantly worse if global temperatures continue to rise. Research led by Simon Fraser University estimates that the worldwide costs associated with climate-driven wildfire impacts could exceed $2.1 trillion cumulatively over the 21st century under a scenario in which global temperatures rise by between 3 and 4 degrees Celsius. The annual global cost could reach approximately $43 billion by the end of the century. The study, published in the journal Environmental Research: Climate, examines the economic consequences of changing wildfire activity and highlights the importance of limiting global warming to reduce future losses. Researchers say the projected costs will depend heavily on decisions made now to reduce greenhouse gas emissions. Sian Kou-Giesbrecht, an assistant professor of resource and environmental management at Simon Fraser University and the study’s lead author, said the economic and societal consequences of wildfires depend significantly on the actions countries take to mitigate climate change. The research examined three potential global warming scenarios: temperatures remaining at or below 2 degrees Celsius above pre-industrial levels, rising by 3 to 4 degrees, or increasing by 4 to 5 degrees. The findings suggest that wildfire-related costs could increase substantially under the higher-warming scenarios. For Canada, the study estimates that direct wildfire-related costs could reach approximately $866 million annually by the end of the century under the 3-to-4-degree warming scenario. The cumulative Canadian costs could total about $46 billion over the century. These Canadian estimates include wildfire suppression expenses, losses in net timber yields and reduced revenue from nature-based recreation. However, the researchers stress that the figures represent only part of the potential economic damage.
The study also estimates the broader global societal costs associated with carbon emissions released by wildfires. These include economic consequences linked to crop losses, health impacts and damage associated with rising sea levels. The combined global estimate is substantially higher than the direct costs measured within Canada. Researchers caution that the projected figures may underestimate the actual financial burden because the modelling did not include several major categories of damage. These include the health effects of wildfire smoke, community evacuations, infrastructure destruction and wider economic disruptions within Canada. The model also did not account for individual extreme events on the scale of Canada’s record-breaking 2023 wildfire season. That year, more than 200 communities were forced to evacuate, while millions of people were exposed to hazardous smoke that spread across provincial and international borders. The 2023 season demonstrated that wildfire damage extends well beyond forests and communities directly threatened by flames. Smoke can travel long distances, deteriorating air quality, disrupting outdoor activities and creating additional health risks for people far from the fires themselves. Wildfires can also place significant pressure on Canada’s forestry industry. When large areas of commercial forests burn, timber availability can decline, affecting logging operations, sawmills, employment and businesses that rely on forest resources. The loss of forests can also damage wildlife habitats, watersheds and ecosystems.
Tourism and outdoor recreation face similar risks. Parks, campgrounds and other destinations may close during wildfire emergencies, while smoke and evacuation orders can discourage visitors. For smaller communities that depend on tourism, these disruptions can lead to lost revenue and employment opportunities. Climate change can increase wildfire risks by creating hotter and drier conditions, drying vegetation and extending periods of weather favourable to fire. However, the severity of individual fires also depends on factors such as vegetation, lightning, human activity, land management and firefighting capacity. The researchers say limiting global warming to 2 degrees Celsius or less could help keep wildfire impacts and associated costs closer to levels experienced over recent decades. By contrast, continued warming could make costly wildfire seasons more frequent or severe in some regions. There are some encouraging signs in the global outlook. Kou-Giesbrecht noted that developments in green energy, particularly outside Canada, have helped make the most extreme warming scenarios less likely than previously anticipated. Nevertheless, the study identifies a rise of 3 to 4 degrees Celsius as a concerning potential outcome if climate action remains insufficient. The findings carry particular significance for Canada, where governments already face substantial costs associated with wildfire prevention, emergency response and recovery. More challenging fire seasons could require additional spending on firefighting resources, early-warning systems, evacuation planning and community protection.
Indigenous communities and residents in remote or forested regions can face particular challenges during major wildfire events. Evacuations may disrupt access to essential services, while damage to traditional territories and surrounding ecosystems can have lasting cultural, social and economic consequences. The financial burden may also extend across generations. Governments could be required to devote increasing amounts of public money to emergency response, rebuilding and recovery, leaving fewer resources available for other priorities. Businesses and households may face additional costs from property damage, insurance pressures and interruptions to economic activity. Researchers say reducing greenhouse gas emissions is essential to limiting these long-term risks. Improved forest management, early fire detection, emergency preparedness and stronger protection for vulnerable communities can also help reduce damage, although such measures cannot eliminate wildfire risk entirely. The study does not suggest that every future wildfire season will be more destructive than the previous one. Fire activity varies from year to year, and local weather and landscape conditions play an important role in determining the severity of individual events. Instead, the research examines how continued global warming could change the overall economic burden over the remainder of the century. The central message is that wildfire costs extend far beyond the immediate expense of extinguishing fires. The wider consequences include damaged forests, lost livelihoods, disrupted communities, health impacts and economic losses that may continue long after the flames have been extinguished.
Researchers say keeping global temperature increases to 2 degrees Celsius or less would help limit the projected damage. Achieving that goal will require substantial reductions in greenhouse gas emissions, alongside continued investment in wildfire prevention, preparedness and community resilience. As Canada continues to confront increasingly challenging wildfire seasons, the study highlights the economic consequences of delaying climate action. Decisions made today could play a significant role in determining the financial, environmental and social burden future generations will face.