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The wildfire smoke that blanketed Michigan in recent days did more than turn skies hazy — it cost the state's economy at least $4 billion in losses, according to a new analysis by the East Lansing-based Anderson Economic Group.
Michigan's air is starting to clear from the wildfire smoke of last week, with air quality indices showing "good" to "moderate" Tuesday, as the effects from last week — when Detroit was briefly named the most polluted city in the world — are beginning to come into focus.
Preliminary estimates from the firm found Michigan experienced more than $4 billion in direct economic losses from the Canadian and northern Minnesota wildfires, second only to the state of New York's estimated $5 billion. Wisconsin experienced nearly $2 billion in losses.
'Michigan had the largest proportional impact'
"I think Michigan was the surprise for us," Max Melstrom, an affiliated expert at Anderson Economic Group, told The Detroit News. "Michigan had the largest proportional impact for the size of its economy across the state region. So the smoke plume just sort of sat over the state, and that accumulated to substantial damages."
Melstrom said Michigan's proximity to the wildfire smoke helped explain why the state was hit harder than expected: "Michigan was reasonably close to the origin of the smoke. It was one of the earlier states to get hit, and it tended to linger. The plume reached New York and had a pretty substantial effect, but it didn't last as long, and the increases in particulate matter weren't as great."
The report estimates only direct economic losses. But indirect costs could push the overall economic toll even higher, Paul Isley, an economist and associate vice president of strategic budget management at Grand Valley State University, said: "Michigan roughly generates about $2 billion a day in GDP. So over the course of this event we're looking at effectively affecting 10% to 20% of the output that we have — and that's not even including some of the more intricate things like medical costs."
Industries that rely on outdoor work experienced some of the largest losses, the report concluded. "There are different parts of the economy that are harder hit than others," Melstrom said. "Transportation and construction were up there because a large portion of their activity takes place outside."
Tom Alvarez, owner of Lawnade Lawn Care Service with locations in Royal Oak and Grosse Pointe, said the smoke, on top of the problems throughout the month caused by extreme heat, has caused his small business to struggle, too.
"Thursday, we did not work at all," Alvarez said. "Friday, we did try to get some work done just because getting behind really sucks. With the heat waves and everything, we've been giving a lot of PTO. This month, we probably won't profit at all because we're paying a lot of guys to work from home and we are looking to at least break even."
Outdoor events, attractions close
The report also identified economic losses tied to canceled outdoor events, closures of parks, amusement parks and health clubs, reduced tourism and fewer customers at businesses that depend on outdoor activity, including restaurants and car dealerships.
At Pine Knob, a large concert venue with capacity for more than 15,000 people, the John Mellencamp concert last Thursday and the Hank Williams Jr. concert on Friday were canceled due to poor air conditions, with tickets refunded automatically via Ticketmaster.
Meanwhile, festivals were delayed and faced lower-than-usual attendance. At the Ann Arbor Art Fair, one of the nation's largest outdoor art fairs, organizers gave vendors the option to close their booths early Thursday and open later than scheduled Friday. Despite this, about 98% stayed open, according to Karen Bauer, executive director of the art fair.
Sarah Gelsanliter, traveling to the Ann Arbor Art Fair from Milan, has sold ceramics at the fair for 12 years. On Thursday, she saw a large difference in turnout: "Usually the first day of art fair is really busy. All the collectors come, all the regulars come. This year, it was like half as many people as usual."
While it's too soon to tell, Bauer said stronger attendance Saturday may have helped to offset slower crowds earlier in the week for artists who traveled from across the country and abroad: "Thursday and Friday obviously were down attendance-wise when the air quality was the worst of it. However, we had a really good day Saturday, crowd-wise."
Another high-profile cancellation was Thunder Over Michigan, one of the nation's largest air shows, which called off its Friday performances at Willow Run Airport in Ypsilanti because of hazardous air quality. The show resumed Saturday.
In Munising, a popular travel vendor, Picture Rocks Cruises, had to cancel half of its tours last Wednesday, and all of its tours on Thursday. 1,500 to 2,000 tickets were canceled, with tickets costing from $48 to $56. All ticketholders with canceled tickets had the option to refund or reschedule. Additionally, anyone uncomfortable with the conditions the other hazy days were granted the same choices.
"Since Thursday, we've been able to run every day, but some days are better than others with the visibility and the air quality," said Jaden Niemi, lead captain and operations manager. "Before all of our trips, we would tell people that they're not forced to go if anyone was uncomfortable with the air quality and that they were more than welcome to exchange or get a full refund. We didn't want to make people seem like they had to go."
Niemi said they were able to reschedule a little over half of customers; for others only in town for a limited time, rescheduling was not possible: "When people are out traveling, they are only here for a certain amount of time, and they try to squeeze in what they can, and then they move on to the next spot."
As current tourism is affected, future tourism could also be at risk, Grand Valley's Isley said: "There's some future issues here, because as people plan their vacations this winter for next summer, they're going to say, 'Oh yeah, Michigan had this smoke event. Do we want to risk using Michigan for where I want to go for vacation?' The memes that were out saying record smoke, record heat and record diarrhea was not great advertising for Michigan."
As for recreational activities, Jada Paisley, executive director of the Michigan Golf Course Association, said golf courses throughout the state struggled, and managed in various ways: "We have definitely been impacted. Golf is a seasonal and weather-dependent industry in Michigan, and with the weather last week, obviously people were cautious to play. We are a six-billion-dollar industry in Michigan, and across the state from up north to down south, golf courses were impacted. The severity varied as did if they stayed open or closed."
Jenny Clasman, executive director of the Boyne Area Chamber of Commerce, told The News that Boyne felt an impact city-wide: "We canceled our evening concert series on Wednesday and the Stroll the Streets event on Friday night was also canceled. We have local vendors that weren't able to set up. So there was some income loss for sure. There were still people in town, but not like normal Friday night. So our restaurants and our retailers definitely lost money as well."
These closures were unprecedented for Boyne, Clasman said: "Hopefully this isn't gonna be a thing every summer. It has been the last three summers. This was the first summer we had to cancel anything due to smoke, though. We've never done that before."
Last Thursday, the Michigan Department of Natural Resources asked campers with reservations through Sunday to cancel because of poor air quality, waiving cancellation fees and issuing refunds.
Anderson Economic Group said it expects to update its estimates as more data becomes available.
This article originally appeared on The Detroit News: Smoke costs Michigan more than $4 billion in losses, analysis finds
