Brian and Sue Geraci survey the remains of their home in Modjeska Canyon in Orange County, Calif., after it was destroyed by the Santiago fire. Experts estimate that the wind-driven fires in Southern California will result in at least $1 billion in losses. - Los Angeles Times

Looking past the fires

LOS ANGELES — Losses from the wildfires ripping across Southern California have reached $1 billion, and economists said Wednesday the tally could be pushed even higher when the final costs of rebuilding and lost tourism are determined.

But the region's diverse, booming economy will likely weather the setback and might even see a mini-boom as it rebounds and rebuilds.

"It's a human tragedy, it's not an economic tragedy," said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy. "It's asset losses, it's property damage, probably a lot less than what people have lost through foreclosures."

About 1,500 homes and more than 410,000 acres have been scorched across seven Southern California counties plagued by the wind-driven fires.

Ron Lane, director of emergency services in San Diego County, the hardest hit area, said damage in that region alone has reached $1 billion. At least 1,200 homes had been destroyed in the county.

Losses linked to the fires could climb even higher throughout Southern California if winter rainstorms send mud cascading down fire-ravaged hillsides into neighborhoods, said Kevin Klowden, managing economist for the Milken Institute.

"Vegetation is going to have been basically wiped out on a number of hillsides," he said.

A big slice of the repair bill will go toward rebuilding downed power lines and roads, including a stretch of Interstate 15, the main highway from Southern California to Las Vegas.

In addition, agricultural areas in San Diego have also been damaged, hurting avocado, citrus and grape crops.

More than 20,000 acres of avocado trees in northern San Diego County have been lost, at least a third of the state's crop, with another 15,000 acres threatened by flames, emergency officials said.

State farmers usually plant about 62,000 acres of avocados, and the industry is worth about $276 million annually, said state Department of Agriculture spokesman Jay Van Rein.

"If they can survive the fire, they can still harvest later," Van Rein said.

But if trees are lost, growers will have to replant orchards and wait years to harvest.

Economists are also eyeing disruptions to businesses and productivity, as nearly 500,000 people were evacuated and businesses were forced to close their doors temporarily.

Popular tourist destinations, such as SeaWorld in San Diego and the Wild Animal Park in nearby Escondido were forced to shut down.

Along with those temporary disruptions, the impact of nationally televised images and media accounts of Southern California ablaze will likely dampen tourism for some time, economists said.

"Incidents like this will drive away a certain number of people," Klowden said.

Some airlines are waiving some fees for passengers who need to change their plans because of the fires. American Airlines, Continental Airlines, Delta Air Lines, United Airlines and US Airways all had notices on their Web sites Wednesday telling customers flying to and from Southern California that they can change their flights for free, saving up to $100 per ticket.

"It's much like when a hurricane impacts the Southeast," said Betsy Talton, spokeswoman for Atlanta-based Delta. "For severe incidents such as this, we try to help our customers to make sure they can change their travel plans. It's good customer service."

The airlines are waiving the fees to and from nearly a dozen cities including San Diego, Los Angeles, Burbank, Santa Barbara, and Palm Springs, with flight dates through Nov. 1.

In spite of the extensive damage to homes and infrastructure, there may be a small silver lining in the calamity, since rebuilding homes and businesses with an influx of insurance and government aid should stimulate the lagging construction industry, which has lost 28,600 jobs in the past year amid the housing slump.

The pace of that rebuilding could be slow compared to the region's recovery after the 2003 firestorms that destroyed more then 3,600 homes and caused insured losses surpassing $2 billion.

"Back then, the home-building market was quite strong," said Jack Kyser, chief economist of the Los Angeles Economic Development Corp. "This time around, home building is slumping."

Jerry Nickelsburg, an economist and co-author of the quarterly University of California, Los Angeles, Anderson Forecast, said calculating the losses will be an ongoing process.

"We are going to enter into a period of rebuilding in all of these areas that have been destroyed, and I don't think we really know what kind of value to put on that," Nickelsburg said.

But the economic pain might be short-lived, he said.

"All in all, the fires occurred in more remote, residential areas," Nickelsburg said. "It will have very little effect on the medium and long-term economic growth and economic health of the region."

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