Estimation of the Caldor Fire Impact on the Lake Tahoe Basin Tourism Economy

Jun 14, 2023 | Environment, Tourism

We estimate the impact of the Caldor Fire using the Lake Tahoe Tourism Impact Model™ (TIM). Our analysis is conducted at the community level. These sub-models are combined to show total impacts of the fire from a regional tourism perspective. Previous estimates of the fire’s economic impacts to Tahoe’s tourism-dependent economy are scarce. According to CalMatters, “California has an incomplete understanding of how much wildfires cost the state each year.”

We estimate the total economic impact to the broader Tahoe region’s tourism economy exceeded $268 million, which is the amount of direct visitor spending that did not occur. If multiplier impacts were added, the total impact would likely reach the $400 million.

Source: Lake Tahoe Tourism Impact Model.

Fire background

The Caldor Fire started on August 14, 2021 and was contained more than two months later on October 21st. The Fire burned 221,835 acres in El Dorado, Amador, and Alpine Counties. Impacts include the destruction of personal property, ecological degradation, poor public health conditions, and reduced economic activity. 

Source: By NASA/Lauren Dauphin.

Lake Tahoe Tourism Impact Model

The TIM first estimates visitors and visitor days by visitor type and month from monthly lodging tax receipts, tax rates, room inventories, and various survey data showing commercial occupancies, room rates, vacation rental (VHR) usage, friends/family and vacation home visitation, and day visitation.

The TIM extrapolates spending at the visitor day level. Daily visitor yields provide an additional reference check on the accuracy of the results. The TIM offers the flexibility to analyze fire and other impacts using a variety of approaches. The results presented in this article demonstrate one approach by considering the average 2019 and 2022 the baseline.

Impacts by Month

For those in the Tahoe Basin who suffered significant losses, the impacts continue. For the overall regional economy, visitor spending returned to previous and anticipated levels by November. The most significant impacts occurred in September as illustrated below.

Source: Lake Tahoe Tourism Impact Model.

Impacts by Select Sectors

The total loss of direct visitor spending in the restaurant sector was over $64 million over the three-month period. Shopping lost $37 million and lodging lost $32 million.

Source: Lake Tahoe Tourism Impact Model.

Geographic Distribution of Impacts

The losses were greatest in the City of South Lake Tahoe, exceeding $100 million. For the South Shore overall, losses reached $169 million or 63 percent of the total.

Source: Lake Tahoe Tourism Impact Model.

As a share of local tourism activity, the City of South Lake Tahoe also experienced the greatest impact losing 34 percent of spending. In Washoe County, the loss was relatively low compared to other communities, at $24 million, but this was 21 percent of activity.

Source: Lake Tahoe Tourism Impact Model.

Impact by Type of Lodging

Traditional commercial lodging properties such as hotels, motels, and B&Bs and the associated spending from this sector, incurred a disproportionate share of the impacts compared to casino lodging and vacation home rentals (VHR). In fact, the 30 percent loss to the commercial lodging sector was twice the share incurred by the VHR sector.

Source: Lake Tahoe Tourism Impact Model.

Insurance Industry Reacts

Recent news headlines underscore the severity of wildfire risk and costs. Allstate and State Farm are no longer accepting new property insurance applications in California. According to the Wall Street Journal, “other property and casualty insurers, including AIG and Chubb, have also been shrinking their California footprint after years of catastrophic wildfires, which are becoming more common owing to drought and decades of poor forest management.”

Conclusion

Evacuations, smoke, poor air quality, and the threat of fire reduced visitor spending across the Tahoe Basin. TIM results show the impacts are unevenly distributed across time and space. While the City of South Lake Tahoe was directly threatened by the fire and incurred the most significant impacts, the entire Basin was impacted by a “Halo Effect” of cancelations resulting from smoke and poor air quality. The results presented in this article show only direct visitor spending, however employment, tax revenue, and other impacts are easily extrapolated from TIM results using economic impact models such as IMPLAN.

A study commissioned by the Sierra Nevada Conservancy offers a number of strategies DMOs should consider for managing and mitigating wildfire impacts. As Robert Wilson writes in The Hill, “when it comes to wildfires, we’re all Westerners now”.

Recent Posts

Lake Tahoe/Truckee Regional Lodging Trend Report 2023

Lake Tahoe/Truckee Regional Lodging Trend Report 2023

Print this report 🖨 This 2023 Lake Tahoe/Truckee Regional Lodging Trend Report informs tourism industry policymakers and residents about the evolving dynamics within the region. The destination has experienced a variety of changes, including a reduction in overnight...

AREVIA POWER SEALS LANDMARK POWER PURCHASE AGREEMENT

AREVIA POWER SEALS LANDMARK POWER PURCHASE AGREEMENT

Arevia Power has signed a landmark power purchase agreement with NV Energy for the largest solar energy and battery storage project in Nevada, valued at over $2.3 billion. The Libra Solar project, expected to be operational by 2027, will feature a 700 MW solar system...

Lake Tahoe/Truckee Regional Lodging Trend Report 2022

Lake Tahoe/Truckee Regional Lodging Trend Report 2022

The Lake Tahoe Truckee Lodging Report is presented to inform the tourism industry policymakers and residents about the changing dynamics of the tourism industry within the region. Tourism in the region has been undergoing changes from before the pandemic. The pandemic...

Affordable Housing Econometrics

Affordable Housing Econometrics

The lack of affordable housing plagues communities and economies across the globe. Elected officials and municipal leaders everywhere know they have the problem. Research to assess the problem can provide some insight and inform policy. Solving the problem requires...

Modeling Tourism Marketing Strategies

Modeling Tourism Marketing Strategies

The tourism industry has changed. Destination Marketing Organization (DMO) tools have changed too. To compete in today's industry, a DMO must have the latest marketing technology. Over-tourism, with too many people descending on destinations during peak seasons, and...

Remote Workers Are Moving to Resorts

Remote Workers Are Moving to Resorts

The impacts of the global coronavirus pandemic have not been distributed equally. Some sectors of the economy have been devastated. Unemployment skyrocketed to 14 percent in April. Other sectors have seen business increases and many people have learned by experience...

Assessing Community Health

Assessing Community Health

Community health needs assessments (CHNA) ensure that local health care providers have the information necessary to improve decision making and resource allocation as they strive to improve their community’s health. A CHNA is a systematic evaluation of a region’s...

Solar Energy Economics

Solar Energy Economics

Solar energy has evolved from an environmental green to the color of money. As the result of rapidly declining module prices and increasing development productivity, solar energy is no longer just good for the planet. Solar is now important for business economics. In...

High Economic Impacts of Higher Education

High Economic Impacts of Higher Education

Universities and colleges contribute significantly to state and local economies across the country. For most institutions the magnitude of their economic impacts has not been calculated. This uncertainty may contribute to reduced support from state governments when...