The wildfires raging in the Spokane, Washington, region "underscore Washington's growing environmental risks as climate-related disasters become more frequent and severe," Moody's Ratings analysts said in a report.
While the full extent of economic losses in the state's second largest city has not been determined, the scale of the evacuations and damage "underscore the growing credit risk that wildfires pose in the Pacific Northwest given their potential to disrupt major economic population centers," Moody's analysts wrote in Thursday's report.
"The Spokane Complex Fires — Old Trails, Autumn Lane, and Fairview — have burned an estimated 700 structures, a number likely to rise as assessments continue," said James Cosgrove, associate director, insurance solutions at Moody's. "They're another stark example of wildfires colliding with the wildland-urban interface."
The Old Trails Fire is the largest of three burning near the city and it has forced more than 60,000 people to evacuate and destroyed more than 700 buildings in the city of 260,000, according to fire officials.
Aaron Farinacci, 37, of Spokane, has been
"Old Trails was especially explosive: driven by 35-40 mph winds, it grew rapidly within hours and used short-range spotting to jump the Spokane River into the North Indian Trail, Balboa, and Five Mile Prairie neighborhoods," Cosgrove said.
It's not just the Pacific Northwest states of Washington, Oregon and Idaho that have been hit by wildfires since August, Nevada and Utah are also battling blazes.
The National Interagency Fire Center reported Sunday that 183 new fires have been reported nationwide since Saturday, including eight large ones. Firefighters are working to contain 94 large fires across the nation and have deployed 30,419 firefighters, including 645 ground crews, 1,870 fire engines, and 226 helicopters. The fires are being managed by 27 complex incident management teams and one national incident management organization, according to the center.
Moody's analysts said wildfire risk is one of the state's most significant physical climate exposures. Federal disaster assistant plays an important role in offsetting costs of major events, analysts said, but if recovery costs are not substantially and timely offset by federal aid, more frequent or severe wildfire events will increase pressure on the state's reserves and further constrain its budget flexibility.
"For the state and affected local governments in the area, near-term cost pressures — stemming from emergency operations, public safety, sheltering, debris removal and infrastructure repair efforts — will be partially offset by direct federal assistance, with the federal government already committing 75% of the initial emergency response costs," Moody's analysts said. "The state is separately preparing a request for a Major Disaster Declaration that could unlock additional Federal Emergency Management Agency (FEMA) assistance for debris removal, infrastructure repair and other recovery costs."
The state benefits from strong economic fundamentals and sizable liquidity, but it is managing structural
"We generally expect state governments can withstand potential FEMA costs shifts to them, in the event of a major reform, but they will need to shift their budget priorities," Moody's analysts said.
Muni bond credit and rating analysts'
