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July 23, 2021

Unprecedented Start to US Wildfire Season Highlights Need to Prepare for Extremes

By Liz Najman, Natalie Ambrosio Preudhomme
Moody's ESG Solutions

The headlines out of Oregon and California in the past few weeks present dire warnings that the US is experiencing the extreme effects of climate change. Our data shows that large swathes of the US west will be at risk of wildfires, heat stress and water stress over the coming two decades, meaning that preparation for this new normal has become essential.  

A deadly heatwave gripped the normally cool Pacific Northwest starting the last week of June, shattering records so thoroughly that scientists quickly declared such temperatures to be virtually impossible without human caused climate change. A wildfire raging over a quarter million acres in southern Oregon has blanketed cities as far away as New York in smoke and is only one of more than 70 fires burning in the western US at the time of writing. Historic drought primed the west for these climate effects and is exacerbating extreme heat and wildfire conditions.  

Dire social and economic impacts

The Pacific Northwest has faced significant economic disruption during the heat wave, as well as ongoing wildfire-related challenges. Transportation slowed as cables, roads, and train tracks buckled and melted in the heat; agriculture suffered the loss of crops and the risk of heat stroke to workers; and restaurants were closed for several days due to dangerous working conditions in kitchens. The electric grid was also stressed due to increased demand, with almost 5,000 Portland area homes without power on June 29.

The health effects of the heatwave are still being assessed but the Centers for Disease Control and Prevention (CDC)found 69 times more heat-related heath incidents during the heatwave compared with a similar period in 2019. Wildfires also present significant long-term health risks, in addition to taking lives and livelihoods. Not only does all smoke increase the risk of asthma, respiratory disease, cardiovascular disease and related hospitalizations by at least 10%, but scientists have found traces of lead and other toxic particles in recent wildfire smoke. As smoke travels large distances, these health effects can be found far from the source of fire and are currently being reported in Denver, Colorado. A 2012 study to quantify the health costs of wildfire-related illness puts the public health burden at $9.50 per exposed person per day. Another analysis puts the increase in health costs associated with wildfire smoke at $280 million from 2012 to 2018 – not including 2020, a record wildfire year.

An unanticipated consequence from Oregon’s Bootleg wildfire was the threat of blackouts as far south as California due to downed powerlines critical to the state’s electricity supply. Within a week, the grid stabilized, but the potential impacts of even a day of lost power to California are considerable: hospitals, schools, manufacturing, and grocery stores rely on an uninterrupted power supply. Planned blackouts meant to prevent wildfires in 2019 are thought to have cost the region $2 billion. This underscores how interconnected and extensive climate risks are, with impacts far beyond the locations directly enduring the hazard.

More frequent and severe extremes a sign of things to come

While some of these threats are expected, events like the late-June heat wave are unprecedented. As the Pacific Northwest tends to have moderate temperatures, many homes and municipal institutions do not have air conditioning and the population has generally been less prepared to contend with extreme heat events. However, the past is no longer an accurate representation of the future.

Climate hazards are interconnected and increasing average annual temperatures contributes to conditions that lead to more severe wildfires and water stress. Moody’s ESG Solutions’ wildfire risk scores provide a forward-looking view on wildfire potential, or conditions conducive to wildfires, based on both on burnable vegetation and on soil moisture deficit.  We find that 21 of the 36 counties in Oregon (58%)and 23 of the 39 counties in Washington (59%) will be at high risk of wildfire by 2040 (Fig 1). While water stress does not present as significant a risk to the region, there is still exposure, which can be exacerbated as other extreme events occur. Three of Oregon’s counties at high risk and 31 at medium risk to water stress (79%), showing that nearly every county in Oregon has some exposure. In Washington one county stands out with high risk while 15 have medium risk to water stress (38%).

Figure 1: Wildfire risk by county for Oregon and Washington, with the darkest red counties at highest risk. Source: Moody’s ESG Solutions


These three hazards facing the west coast this summer are not isolated or unrelated incidents. Wildfire, heat stress and water stress create feedback loops in which each fuels additional extremes. Water, in air or soil moisture, has a remarkable ability to store heat, helping reduce the temperature increase in air or land. This means that in times of drought, air and surface temperatures rise more quickly because there is no moisture to serve as a buffer. However, ironically when the soil hardens during a drought or after a wildfire, rain is more likely to cause flooding than when the soil is moist and able to absorb more water. This both exacerbates flood risk and perpetuates drought as aquifers are not as easily refilled.

As we have several months of wildfire season still to come in the Western US, we will likely see continuing extreme events in exposed communities, underscoring the importance of ongoing efforts to build with wildfire in mind and to prepare for the public health impacts of increasing extreme heat events and wildfire smoke.

Moody’s ESG Solutions provides insights and analyses on ESG themes and multi-stakeholder performance, climate-related risks and opportunities and global sustainable finance trends.