Fort McMurray businesses could have a tough time emerging from a fire that has resulted in all of its people being evacuated.
It's too early to tell what the extent of their pain will be. But experts say that the economic fallout from natural disasters doesn't always last very long.
Heavy smoke rises above Memorial Drive, in Fort McMurray, Alta. as a huge wildfire forces mass evacuation of the entire city, on May 3, 2016. (Photo: CP/Newzulu)
In 1998, the "Great Ice Storm" knocked out power to over 1.6 million people as ice and freezing rain came pouring down on Quebec and Ontario.
CIBC says the event initially reduced Canada's economy by as much as 0.3 percentage points, The Financial Post reported.
But rebuilding efforts eventually boosted the economy by 0.1 percentage points that year.
The smoky remains left behind by the Slave Lake fire of 2011. (Photo: CP)
And that's not the only time that a disaster has, in a roundabout way, actually spurred economic growth.
The 2011 Slave Lake fire caused damage estimated at $700 million, and it yanked down the gross domestic product (GDP) in the oil and gas industry by five per cent, BMO economist Robert Kavcic told the newspaper.
The Canadian economy felt it in the second quarter of that year — but it bounced back in the third, despite the fire's costs.
In 2008, the Sichuan earthquake in China reduced cities to rubble. But the reconstruction effort supplied the Chinese economy with billions of dollars, The New York Times reported.
In fact, it helped boost the country's economy by 0.3 per cent.
Smoke fills the air as a small plane flies overhead in Fort McMurray, Alta. on May 3, 2016. (Photo: Kitty Cochrane/CP)
Of course, the Slave Lake fire happened in an entirely different economic context, when oil prices were in the range of $100 per barrel.
But Herb Emery, research director at the School of Public Policy at the University of Calgary, told Business News Network (BNN) that natural disasters don't necessarily have long-lasting effects on an economy.
"Most of the costs are going to be borne locally by businesses that won't reopen in that location, investment that doesn't come back the same way it was before," he said.
Wildfires burn in and around Fort McMurray, Alberta on May 4, 2016. (Photo: Jeff McIntosh/AP/CP)
As for the Fort Mac residents who've been hit by the fire directly, Emery said there could be a fight over who receives what government assistance.
He noted that during the Canmore flood of 2013, the government decided not to compensate people for second homes, only for primary residences.
"You're going to run into situations where some support will be coming or none," Emery said.
"We're going to have to come up with decisions on what we're going to do, and that's going to be up to the Notley government."
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