The Burning Question: Is an Economic Issue Making the Canadian Wildfire Crisis Worse?

The Canadian wildfire crisis is extending beyond national borders, impacting communities and imposing external costs on individuals far removed from the fire's path.

Today, we're turning our attention to our neighbor to the north. Canada is facing a severe wildfire crisis, with over 400 active fires and widespread smoke plumes that have even reached northern U.S. cities. It's a story of climate change, labor shortages, and the struggle to keep communities safe.

Canada's wildfire season typically runs from May through October, but this year, the destruction has been heavily concentrated at the start of the season. The Canadian wildfire crisis is extending beyond national borders, impacting communities and imposing external costs on individuals far removed from the fire's path. While wildfires are a more common occurrence on the West Coast of the United States, northern U.S. cities got a firsthand experience of their own.

From the top of the Rockefeller Center in New York, the Hudson River could no longer be seen through the skyscrapers [Source: BBC]

So, what's caused this year’s devastating wildfire season? Well, climate change-induced temperatures and droughts have created the perfect conditions for these wildfires to thrive. But that's not the only problem. Canada has also been grappling with a shortage of firefighters. And as you can imagine, it's made tackling this crisis all the more difficult.

To help address the shortage, Canada has called on its southern neighbor for assistance. Since May, over 600 U.S. firefighters, support personnel, and firefighting assets have joined forces with Canadian firefighters. Together, they're working to combat what is likely to be the worst fire season in Canadian history.

The impact of these wildfires extends well beyond the immediate regions in which they're burning. Many northern U.S. cities, located just across the border, have experienced poor air quality and hazardous smoke, reminding us of the spillover effects of this natural disaster. It's not just about the damage from the fires themselves; these externalities include health-related issues and income disruptions for people hundreds of miles away from the source.

But let's dive deeper into the shortage of firefighters and how it's making the crisis worse. Canadian firefighting units operate differently from traditional labor markets. A lot of towns and villages rely heavily on volunteers who offer their services to protect their communities, but those numbers are dwindling. Canada has already lost 30,000 firefighters over the past six years, according to a national survey. While career firefighters are paid well, the volunteer model has its limitations.

The median pay for career firefighters is well-above Canada’s median hourly pay, but only about 70% of Canada’s firefighters are volunteers and only receive a tax credit.

In the past, small towns and villages had a sufficient pool of volunteers willing to work a few hours each week at no pay. The intrinsic reward of serving their community was enough. But as demands increased, the old system couldn't keep up. And that's when the shortage became more apparent. Shortages occur whenever wages (or prices) are below some market level, but a variety of factors can cause them. The most likely cause is an increase in demand for first responders.

The responsibilities of firefighters have evolved over time, such that it’s not just about fire suppression any more. They're now responding to car accidents, medical calls, off-road rescues, overdoses, and, of course, forest fires. With such a wide range of incidents, specialized training has become crucial. According to a national survey, around 50% of calls responded to were for medical emergencies, while only 10% were for fire suppression. As a result, the demand has increased such that volunteer services can’t cover all of a community’s needs.

There may be some people willing to work for no pay (the flat part of the supply curve), but only up to so many hours each week. At a certain point, their supply curve pivots upward. If a unit expects volunteers to serve a lot each week, those workers may decide they need to start being paid as a career firefighters. For small towns with low demand for first responders, a limited pool of volunteers may be enough to meet the town’s demands. As demand increases, however, zero wage creates shortages.

As Canada faces unprecedented wildfires, the demand for firefighters, both career and volunteer, has reached an all-time high. Recruiting new firefighters, however, is no easy task. Extensive training requirements and associated costs are barriers to entry for potential recruits. Hazardous working conditions and physical demands further deter individuals from pursuing these careers. On top of all of that, aging firefighters are nearing retirement age which exacerbates the shortage.

While the wildfires have brought our attention to this particular shortage, keep in mind that it’s not just limited to firefighters. Similar challenges exist in other sectors that require specialized skills and face high-risk situations. Think emergency medical services, law enforcement, and disaster response teams. When shortages occur, coverage becomes inadequate, response times are delayed, and community risks increase.

We all rely heavily on firefighters to ensure our community’s safety and well-being. But when they're overwhelmed by wildfire outbreaks, their availability to respond to other emergencies, such as house fires, medical calls, and accidents, is compromised. This not only puts lives at risk but also strains the resources of local emergency services.

All the fires currently burning in Canada and how big they are [CBC]

So, how do we address the shortage of firefighters and mitigate some of the externalities caused by wildfires? It's going to require a comprehensive approach, one that involves collaboration between government agencies, firefighting organizations, and community stakeholders.

First and foremost, policymakers must consider strategies to attract and retain firefighters. Enhancing compensation packages, providing more support for training and education, and improving working conditions— are all crucial steps to make the profession more appealing and competitive. Volunteers who serve at least 200 hours during the year qualify for a $3,000 tax credit, but the Canadian Association of Fire Chiefs has called for that to increase to $10,000. Firefighters play a vital role in our communities, and it's essential to recognize their value.

Municipal fire departments also face recruitment challenges because of financial constraints. More than 40% have had to defer training and new equipment. If fire protection is intended to serve as a public good, governments must address funding issues that prevent fire departments from providing a full range of services their constituencies demand.

As we face the anticipated effects of climate change, the urgency to address the shortage of firefighters grows even more crucial. With rising global temperatures and unpredictable weather patterns, the frequency and intensity of wildfires are expected to increase. Without adequate resources and personnel, communities will become increasingly vulnerable to the devastating impacts of wildfires, exacerbating the externalities experienced by both immediate and neighboring regions.

• There were approximately 156,000 firefighters in Canada in 2016, but only around 126,000 in 2022 (of this, 90,000 are volunteers) [Canadian Association of Fire Chiefs]

• In the province of New Brunswick, 95% of the 5,000+ firefighters are volunteers [CBC]

• About 25% of Canadian firefighters are over the age of 50 [Canadian Association of Fire Chiefs]

• Lightning is usually responsible for about half of all fires in Canada, and 85% of the area burnt each year [Nature]