SDG 11: Sustainable Cities and Communities | SDG 13: Climate Action
Ministry of Home Affairs | Ministry of Environment, Forest and Climate Change (MoEFCC)
The United Nations Office for Disaster Risk Reduction (UNDRR) has released an analysis highlighting that while global wildfire losses are often measured by insured damages, the “invisible costs”—borne by communities, ecosystems, and health systems—are far greater and more persistent. In 2025, wildfires burned 390 million hectares globally, an area equivalent to 92% of the European Union. While the January 2025 Los Angeles fires were the costliest single event at USD 53 billion in damage, over half of the global burned area (246 million hectares) occurred in Africa, where losses to subsistence livelihoods and cultural heritage remain largely uninsured and unmeasured.
Rising Exposure and Systemic Gaps
Expansion into Risk Zones: Economic losses have increased by roughly USD 170 million annually since 1970 as settlements expand into fire-prone areas; the number of people living in these zones has grown by 40% in two decades.
Structural Blind Spots: Most countries lack Average Annual Loss (AAL) and Probable Maximum Loss (PML) metrics for wildfires, causing them to be sidelined in fiscal planning and investment decisions.
Insured Loss Share: Wildfires now account for 7% of global insured losses from natural hazards, up from 1% before 2015, with eight of the ten costliest events occurring in the last decade.
Carbon Feedback Loops: Wildfires emitted over 8 billion tonnes of CO₂ between March 2024 and February 2025, reinforcing climate cycles that intensify future fire risk.
The Long-term and Cascading Impacts
Public Health Toll: Smoke exposure in the LA fires was linked to 440 deaths—far exceeding the 31 immediate fatalities—while smoke can reach 60 times WHO safety thresholds, impacting fetal development and long-term respiratory health.
Ecological Degradation: Fire is now the leading driver of global forest loss, affecting water quality for up to eight years after an event as contaminants like organic carbon and sediment flush into watersheds.
Social Inequality: Disasters worsen pre-existing inequalities; research shows women disproportionately take on more unpaid household work during recovery and reconstruction phases.
What is the ‘Average Annual Loss (AAL)’ in disaster risk analytics? It is the estimated long-term average cost of losses caused by a specific hazard (like wildfires) in any given year. Unlike insurance claims which only track historical payouts, AAL acts as a forward-looking metric for fiscal planning by accounting for both high-frequency, low-impact events and rare, catastrophic disasters. In the context of the UNDRR analysis, the absence of AAL data for wildfires in most countries creates a “structural blind spot,” leading to the chronic underfunding of prevention and mitigation measures.
Policy Relevance
Quantifying the full spectrum of wildfire impacts is essential for shifting from reactive insurance-based models to proactive disaster risk management.
Strategic Impact for India:
Integrating Fire into National Risk Profiles: As India faces increasing forest fires, aligning national data with the Sendai Framework for loss tracking is vital to move beyond qualitative assessments.
Protecting Watersheds: Given that forested watersheds supply much of the drinking water, Indian policy must focus on post-fire water treatment and ecosystem restoration to prevent decade-long water degradation.
Urban Planning and Zonal Restrictions: Addressing the 40% growth in high-risk zone settlements requires stricter land-use regulations to prevent the escalation of economic exposure.
DPI for Social Protection: Leveraging Digital Public Infrastructure can help identify and support vulnerable informal workers who lose livelihoods during fires, a gap highlighted in the LA disaster.
Relevant Question for Policy Stakeholders: How can India implement ‘insurance-linked instruments’ that provide immediate liquidity for ecosystem recovery and social repair, rather than just property reconstruction?
Follow the full news here: The invisible costs of wildfire disasters in 2025