Maui, Hawaii, is grappling with one of the most significant tragedies in its recent history. The devastating wildfires that have swept the island have resulted in an unprecedented economic and human toll.
Risk Management Solutions (RMS) from Moody’s Analytics has estimated the economic losses to be between $4 billion and $6 billion, as reported by CNBC.
These alarming figures only capture a portion of the total impact. RMS’s calculations considered direct property damages and commercial interruptions.
However, Moody’s warns that the true cost could be even higher. The impact on Hawaii’s Gross Domestic Product, the government’s expenditure in response to the disaster, and the social cost of the fires have not been accounted for.
Moreover, Maui’s recovery might face additional challenges. Inflation is expected to drive up prices during the reconstruction process. Maui already contends with high prices due to its remote location, and labor costs in the construction sector are steep.
The human toll is equally heart-wrenching. According to data gathered by CNBC from Maui County officials, at least 115 people have perished, and over 800 remain missing.
The historic town of Lahaina has borne the brunt, with over 2,100 acres burned and nearly 2,200 structures destroyed. Moody’s estimates that the insured property value in the affected areas of Lahaina and Kula ranges between $2.5 billion and $4 billion.
Despite the magnitude of the disaster, there is hope. Insurance is expected to cover at least 75% of the damages, as Hawaii boasts a high insurance coverage rate, and wildfires are typically included in standard policies. President Joe Biden has pledged that the federal government will stand by Maui “for as long as it takes” and that the island’s inhabitants will decide how Lahaina will be rebuilt.
Climatic conditions have played a pivotal role in the fire’s spread. Strong winds from Hurricane Dora and an ongoing drought on the island have fueled the flames. While the exact cause of the fires is still under investigation, the electric company Hawaiian Electric is facing lawsuits suggesting that fallen power lines might have triggered the catastrophe.
With information from CNBC