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There is a lack of evidence regarding how natural resource markets have responded to recent increases in climate-induced extreme events like wildfire. Wildfire can affect the economic value of forests by directly damaging the existing tree stock and by altering landowner risk expectations of future wildfire arrival. This paper uses parcel data over a seventeen-year period to estimate the effects of large wildfires and drought stress on market prices for private timberland across the three Pacific states of the western U.S. In addition to estimating the land price impacts of wildfires on parcels that were directly burned, we identify changes in risk expectations by estimating the impacts from wildfires that burned in close proximity rather than directly on timberland that was sold in the land market. Results indicate that recent increases in large wildfires and drought stress over the past two decades have lowered the economic value of timberland by approximately 10%, or about $11.2 billion in damages across the three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. Results provide evidence on the costs of climate-induced extreme events on natural capital that have already occurred. • Climate-induced extreme events, such as drought stress and large wildfires, negatively affect the economic value of timberland in the Pacific states. • Wildfires lower timberland values through two avenues: direct damage to the existing forest stock and neighboring fires that alter landowners' expectations of fire arrival. • As a result of recent increases in drought stress and large wildfires, the economic value of timberland has been reduced by approximately 10%, or about $11.2 billion in damages across three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. [ABSTRACT FROM AUTHOR]