Canadian wildfires have already burned millions of hectares, forced more than 100,000 people from their homes and blanketed cities with smoke across North America.

It has been called the worst start to a wildfire season in the country’s history and could shatter more records before it’s done.

Apart from the damage wildfires are doing to the nation’s timberlands, environment and health of residents, they could also “choke” the economy, says a new study from Oxford Economics.

It’s only June and wildfires are already past the halfway mark to the previous record of 7.5 million hectares burned in 1989. If the season continues on this path it will at least match that record and possibly exceed it.

Across the country, the fires have disrupted industry, shutting down oil and gas production in Alberta, mining operations in Quebec and sawmills in the forestry industry. Oxford estimates the effects in the second quarter carved about 0.1 percentage points off Canada’s real gross domestic product.

Should the wildfires worsen, as experts predict, the economic fallout will spread, said Oxford’s director of Canada economics Tony Stillo.

The biggest hit to the economy would be through oil and gas production and mining in Alberta, British Columbia and Quebec, where fires have been forcing shutdowns since May. Oxford estimates wildfires closed four per cent of Alberta’s oil and gas industry last month.

In British Columbia, the Donnie Creek wildfire, the province’s biggest yet, is racing through the gas-producing region.

At 5,500 square kilometres, the Donnie Creek blaze is almost as big as Prince Edward Island, and the B.C. wildfire Service said it could be winter before it is out.

About seven per cent of Quebec mines were shut in June, Oxford estimates. Nationally, 2.7 per cent of the sector could be closed in the third quarter in Oxford’s low-impact scenario and 5.1 per cent in its high-impact analysis.

Shutdowns in the forestry sector could range from 1.5 per cent of the industry to 3.7 per cent.

Closures of mines, oil and gas operations and forestry could then push up the prices of lumber and fuel, and premiums for property and casualty insurance could also increase, said Stillo.

Tourism is also at risk. In California’s record wildfire season of 2017, 11 per cent of potential travellers cancelled trips to the state, one study showed.

And poor air quality has the potential to disrupt outdoor work such as construction. A research paper in 2022 on the impact of wildfire smoke on the United States labour market found that each additional day of smoke exposure reduced quarterly earnings by about 0.1 per cent, said Stillo.

Oxford estimates that the wildfires could reduce GDP by 0.6 percentage points in the third quarter in its high-impact scenario, worse than the impact of the 2016 Fort McMurray fires that cut Canada’s GDP by 0.4 percentage points.

The economic impact will depend on the extent of the fires and where they occur, said Stillo, and the damage could be even worse if they shut down major traffic corridors and disrupt supply chains and possibly power supplies to cities.

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The percentage of people on employment insurance in Canada is the lowest in 26 years, except for a brief period during the pandemic, says BMO senior economist Sal Guatieri, who brings us today’s chart.

The 2.2 per cent on the benefit is down 24 per cent over the past year, or by 122,080, said Guatieri, and the improvement has been spread across the nation and age groups.

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What are merger arbitrage investment strategies and are they tax efficient?

A keen DIY investor has been wondering about merger arbitrage investment strategies, which have only been available to retail investors since 2019. We asked portfolio manager Amar Pandya to let us in on what they are and whether there are any tax advantages.

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Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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