Texas Border Business
Recent wildfires in the Texas panhandle have burned well over a million acres, causing tragic loss of life and devastating local communities. In addition, the fires have destroyed livestock and grazing land in this region which is crucial to the US beef industry.
Although the high human cost and devastation are the primary concerns, the fires also involve very large economic harms. The Perryman Group estimated the losses associated with the agricultural sector based on the acreage burned, farm and ranch land in the affected counties, and typical reductions in the level of output caused by fires.
These preliminary estimates are for the current year only, as there will be ongoing losses going forward as the land recovers. In addition, significant numbers of homes, barns, businesses, and other buildings have been destroyed which will lead to further damages and related economic losses; these costs were not included in the estimates.
The Perryman Group’s US Multi-Regional Impact Assessment System was used to estimate the total (not only direct, but also indirect and induced) effects of agricultural losses associated with wildfires. The System was developed by the firm about 40 years ago and has been used in thousands of analyses throughout the country. This complex model and dynamic processes allow for estimation of the total economic consequences of the direct costs associated with the agricultural damage due to the wildfires.
The Perryman Group estimates that, when multiplier effects are considered, agriculture-related losses associated with the Texas panhandle wildfires will lead to a reduction in economic activity including $219.8 million in gross product and 2,035 job-years in the region. For the state as a whole, losses include a projected $264.6 million in gross product and 2,336 job-years (including results within the Panhandle Region as well as effects in other areas). (A job-year is the equivalent of one person working for one year, though it could be multiple individuals working partial years.) Industries which would be particularly hard hit by agricultural losses include not only agriculture itself, but also consumer-related businesses such as retail trade and restaurants as well as manufacturing (such as downstream food processing). It is also worthy of note that only about 68% of the agricultural losses are associated specifically with the land damaged by the fires, with the remainder reflecting downstream activity (such as feed).
The recent wildfires have decimated livestock herds and grazing lands. They have also destroyed homes and businesses. Even worse, they have caused the tragic loss of human lives. The outpouring of support and assistance from other parts of Texas and the nation has been generous and heroic. Hats off to all who have helped during this most difficult time. Ultimately, recovery will emerge. Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
