Californians caught a break in the 2022 wildfire season. Only about 362,000 acres burned last year, compared with 2.5 million the previous year and 4.3 million in 2020, the most in roughly a century. California has always been prone to wildfires, but the state’s peak fire years are becoming more intense and more deadly. Thirty-three people lost their lives to wildfires in 2020. The Camp Fire of 2018, which destroyed the Sierra foothills town of Paradise, killed 85, making it the deadliest blaze in the state’s history. Fires are also becoming costlier. The Camp Fire damaged or destroyed nearly 20,000 structures and caused $8.4 billion in insured losses. Losses from fires in 2020 exceeded $19 billion. Yet, despite these risks, residents keep leaving California’s relatively safe coastal cities and moving into fire country. Today, more than one-quarter of the state’s population—some 11.2 million people—live in areas of heightened fire danger.
Some are drawn to naturally beautiful regions like Santa Barbara County or the California wine country. But many are pushed into harm’s way by extreme housing costs in urban centers. “California is the epicenter of the nationwide housing shortage,” Redfin’s chief economist, Daryl Fairweather, told me. Strict regulations make it hard to build housing in San Francisco, Los Angeles, and other cities. “So builders look for areas where it is easier to buy land and there are fewer restrictions,” she said. One report finds that, between 1990 and 2010, half of all new homes in California were built in fire-prone, nonurban settings. The rise of remote work seems to have accelerated this trend. Over the past five years, Redfin’s data show, housing prices have soared 40 percent to 60 percent in some of the state’s booming semirural markets, including Napa and Sonoma Counties and the Tahoe region. (Rising interest rates have cooled sales in recent months.)
Not all of California’s at-risk housing is in remote areas. Restrictions on high-density development in their urban cores put pressure on California municipalities to grow horizontally. Many cities try to limit sprawl by enforcing “urban growth boundaries.” But the boundaries aren’t airtight. Over recent decades, clusters of housing have crept into the canyons of the Santa Monica Mountains, the grasslands of the Bay Area, and the rugged hills east of San Diego. In the East and the Midwest, urban sprawl usually claims former farmland. But in California, as in much of the West, new neighborhoods often extend into virgin terrain. A 2015 U.S. Department of Agriculture study defines areas “where structures and other human development meet or intermingle with undeveloped wildland” as the Wildland–Urban Interface, or WUI. Homes in the WUI are far more exposed to wildfires, though homebuyers rarely focus on these risks, and they have few tools to assess their level of vulnerability.
Defending California’s WUI homes from wildfires adds hundreds of millions of dollars to state and federal firefighting budgets. Many far-flung clusters of housing require new roads and power lines, raising infrastructure costs. Compared with denser urban housing, homes in the WUI impose greater environmental costs, as well: they fragment fragile habitats, generate more greenhouse-gas emissions, and require their owners to drive longer distances. Given these financial and environmental burdens (not to mention risks to human life), one might assume that California would discourage wholesale migration into fire country. In fact, aside from a few token gestures, the opposite is true. Through an array of mostly subtle policies, California nudges its citizens to leave well-protected cities and to move to high-risk, semiwild regions.
In this issue, Judge Glock describes the layers of regulations that limit housing construction in California cities, thereby driving costs up and homebuyers out. (See “The Regulatory Labyrinth.”) Another set of policies tends to pull residents into WUI regions. These perverse incentives include insurance regulations that shield homeowners from the true costs of their fire risks, as well as disaster-relief programs that encourage rebuilding in fire-ravaged areas. State and federal firefighting programs add another hidden but substantial subsidy. By prioritizing the protection of homes in low-density, high-risk areas, wildfire suppression operations effectively transfer wealth from safe urban areas to residents of fire country.
Migration into the WUI isn’t just a California problem. Arizona, Idaho, Montana, and other western states are all grappling with the intersection of population sprawl and fire risk. In December 2021, a fire tore through grasslands and housing developments on the outskirts of Boulder, Colorado. In just a few hours, the blaze destroyed nearly 1,100 homes and caused more than $2 billion in damage. The Boulder County fire was a vivid demonstration of the “expanding bull’s-eye effect.” Forty years ago, that region was thinly populated; a fire sweeping through it would have mostly burned dry grass and a few scattered houses. But a building boom since the early 1990s put thousands of expensive houses in the fire’s path.
This phenomenon can be seen across the country: growing development in vulnerable areas ensures that fires (or, in coastal regions, hurricanes) cause more financial damage with each passing year, even if the size and frequency of these disasters don’t change. The media and environmental advocates often attribute increased fire hazards to climate change. And it is true that warmer, drier conditions appear to be increasing California’s incidence of “extreme fire weather,” especially during autumn months. But explosive housing growth in WUI regions is a risk multiplier above and beyond any gradual trends in the rate of fires. When policymakers stress climate as the overarching reason for growing fire costs, they draw focus away from more pragmatic policies that could reduce risks today, not just in a distant, theoretical future.
The map of California is studded with expanding bull’s-eyes: burgeoning communities surrounded by scrub, forest, or grasslands. The risks facing those enclaves are amplified by the state’s unmatched propensity for wildfires. “California’s fires are as monumental as its mountains and winds,” writes Stephen J. Pyne, the noted fire historian. “It’s a place that nature built to burn, often explosively.” The state’s Mediterranean climate plays a role. Wet winters promote the growth of lush grasses and brush. Then, long, dry summers desiccate vegetation until the entire state is a tinderbox. In the late summer and fall come the Santa Ana winds—hot, dry air flowing from high inland plateaus toward the Pacific—often at speeds of more than 50 miles per hour. In such conditions, a single spark can ignite a conflagration within seconds.
Even if the state were unpopulated, fires—set off by lightning—would be a routine occurrence. But the state is not unpopulated. And most fires are caused not by lightning but by humans. “People are highly prone to starting fires,” notes Stephanie Kestelman, a Harvard Ph.D. candidate studying the economics of wildfire policies. The massive Mendocino Complex fire, in 2018, was triggered by sparks from a rancher’s sledgehammer. In 2020, a pyrotechnic device detonated at a “gender-reveal” party set off a 22,000-acre fire near San Bernardino that killed a veteran firefighter. But the risk of human-caused fires varies dramatically by location, Kestelman says. In densely settled regions, population growth doesn’t meaningfully increase wildfire risk. “When almost everything is paved, there’s not much to burn,” she notes. But when substantial numbers of people migrate into semiwild environments, the incidence of fires skyrockets.
Residents of the WUI live in their widely spaced houses—with their barbecue grills and gas-powered equipment—surrounded by exquisitely combustible materials. Fires are all but inevitable. Developments in the WUI therefore produce a kind of double bull’s-eye effect: they place more expensive real estate in the path of fires, but they also increase the frequency of fires. It’s as if the condos lining Florida’s coast somehow spawned their own hurricanes.
The power lines that serve remote communities increase fire risks as well, especially during periods of high winds. A 2022 report by the California state auditor determined that, since 2015, “power lines have caused six of the state’s 20 most destructive wildfires.” The deadly Camp Fire was one of them. Power companies can’t refuse to provide service to remote communities. Nor are they permitted to levy a surcharge to cover the added costs and risks of maintaining power lines in fire country.
People often equate the wildfire risks facing WUI residents with the dangers that hurricanes pose to people living on seacoasts. But there is a crucial difference: “We have no control over where a hurricane hits,” Kestelman says. “But we actually have a lot of control over wildfires.” A 2019 working paper by economists Patrick Baylis and Judson Boomhower explores how large public expenditures on wildfire protection “subsidize development in harm’s way.” The authors conclude that firefighting programs are a major factor promoting housing in the WUI because “unlike cyclones or earthquakes, wildfires can often be stopped in place to protect homes and other valuable assets.”
Firefighters have several tools to halt an advancing wildfire. They can cut fire lines, removing swaths of vegetation to create a barrier to the blaze. And they can call in airdrops of water or fire retardant. These techniques are labor-intensive and risky for firefighters. So if a fire is moving through an unpopulated forest, fire crews will often let it burn until it reaches an existing barrier, such as a river. (Today, foresters believe that occasional wildfires are beneficial to most western forests.) But when a wildfire approaches human settlements, firefighters go all out to save homes and businesses. “Efforts to protect private homes appear to account for the majority of wildland firefighting expenditures,” Baylis and Boomhower observe.
Nationwide, federal agencies spent $43 billion fighting wildfires from 1985 through 2017, the authors estimate, with annual costs roughly doubling over that period. A large share of that money is spent in California, where about half the land is in federal hands. The state matches federal efforts with its own enormous wildfire-management agency, known as Cal Fire. Combined state and federal operations against major fires resemble military campaigns. At the peak of the 2020 season, some 18,500 firefighters fought outbreaks across the state. Cal Fire deployed as many as 132 aircraft daily, including vintage DC-10 and 747 passenger jets converted into firefighting planes. (A single drop of retardant from one of these VLATs, or Very Large Aircraft Tankers, costs more than $80,000.)
In a severe fire year, Cal Fire’s firefighting costs can reach $1.3 billion (in addition to over $1 billion spent on wildland management intended to reduce fire risk). These herculean efforts don’t always succeed, as the 2018 destruction of Paradise attests. But, more often than not, California’s firefighters do manage to save homes and businesses in the paths of fires. For example, the Tahoe-region Mosquito Fire—2022’s largest blaze—destroyed 78 structures. But more than 9,000 threatened buildings were spared.
In their nationwide study, Baylis and Boomhower highlight a vicious circle in wildland fire policy. The implicit promise to protect homes from wildfires creates a moral hazard encouraging more homebuilding in high-risk regions. In turn, “that residential development dramatically increases firefighting costs.” The authors also find that the cost of saving homes varies dramatically, depending on housing density. In order to save, say, a 400-acre development in a wildland area, firefighters need to stop the fire before it gets close to the inhabited zone. The expense of clearing fire lines or air-dropping water will be similar, regardless of how many houses sit on those 400 acres. “The difference in response costs between a fire threatening dozens of homes and a fire threatening several hundred or even several thousand homes is strikingly small,” Baylis and Boomhower write. They conclude, therefore, that per-home protection costs are highest for widely spaced houses on large lots. By the same token, adding more houses to a given patch of protected land has little impact on firefighting costs. In other words, economies of scale exist in fire suppression.
Clearly, a master plan designed to keep residents safe—and firefighting expenses low—would encourage building houses in dense, defensible communities, while leaving much wildland terrain unpopulated. But that’s not how things work in fire country. Instead, the costs of fire protection are borne by state and federal agencies—ultimately, by all taxpayers—while decisions about where and how to build are generally made by rural localities and homeowners themselves. Relieved of responsibility for preventing fires, communities have less reason to require fire-resistant building methods or to zone for density and fire resiliency. And homebuyers “don’t have to do the math of figuring out how their fire risk goes up in more remote areas,” Kestelman says. Nor do they have as much incentive to clear brush or take other steps to make their homes less vulnerable.
Using historical fire records, Baylis and Boomhower produce actuarial estimates of what it will likely cost the government to protect WUI homes from future fires. The results are stunning: in high-risk, low-density settings, they find, the net present value of fire protection can exceed 20 percent of a home’s value. Wildland firefighting therefore entails a large “transfer of wealth to homeowners in high-risk locations.” In other words, a policy meant to protect people and property from wildfires winds up rewarding homeowners who adopt the riskiest lifestyles and penalizing those who choose to live in safer places.
Even the most aggressive fire suppression doesn’t always succeed, of course. California’s WUI houses burn far too often. In a rational market, insurers would price in expected wildfire risks, and those higher rates would dissuade many homebuyers from moving to fire-prone areas. However, that model only partially applies in California. Though insurance rates have climbed in high-risk regions, state regulators keep a tight lid on increases. A 2020 Rand report found that insurers don’t believe that the authorized rates in fire-prone communities “fully reflect the difference in risk.” Regulators are also forcing more fire-related costs onto insurers through a host of administrative changes, such as repeated moratoriums during which companies cannot cancel policies in fire zones. While these efforts to protect homeowners might be driven by humanitarian concerns, they put insurers in an unsustainable bind. Many companies are backing away from covering homes in high-risk districts.
As insurers exit, more homeowners are turning to California’s state-run disaster-insurance program, known as FAIR. The program is meant to provide basic, temporary coverage as an insurer of last resort, but many homeowners in fire country say that it’s their only option. Today, FAIR’s rates are generally higher than those offered by private insurers. But, as the program grows, pressure will increase on political leaders to make it more generous. The process has already started: in 2020, the state’s insurance commissioner (an elected office) moved to broaden the FAIR program’s benefits and raised the coverage ceiling from $1.5 million to $3 million. University of California–Santa Barbara economist Andrew Plantinga told the climate news site Grist that insurance regulators need to be more transparent about fire risks and end policies that are “essentially subsidizing people to move into these areas.”
Slowing California’s risky rush into fire country will require policy shifts in several areas. First, the state needs to stop pushing residents out of cities. As the Manhattan Institute’s Edward L. Glaeser and many others have advocated, the state must lower the barriers to building housing in urban areas. “It shouldn’t be easier to build a development of single-family homes in the WUI than to build a five-story apartment building downtown,” Kestelman says. California’s housing advocates have won a few recent skirmishes against antidevelopment regulations, but leaders need to do more. The state also must reform policies that pull people into high-risk regions. Insurance rates should reflect the actual risks of living in fire country. Power companies should be allowed to charge rates that cover the elevated costs of serving remote users. And state-funded infrastructure shouldn’t facilitate development in the riskiest areas.
Still, given California’s crushing housing shortage, it isn’t practical—or humane—simply to discourage all homebuilding in the WUI. People have to live somewhere. Zoning rules and insurance regulations should favor safer construction methods and development patterns in California’s nonurban regions. So far, most such policies have focused on making individual houses more fire-resistant. That’s a good start. But it is also possible to make entire communities safer. The California nonprofit Next 10 recommends policies favoring “resilience nodes.” These are dense clusters of housing, built with fire-resistant materials and surrounded by “defensible space.” Research shows that managed greenbelts—including playing fields, golf courses, and vineyards—can provide effective buffers between combustible wildland and such housing clusters.
Today, WUI housing too often consists of suburban homes on lots of an acre or more. Such developments, stretching across the landscape for miles, are the hardest to defend from fires and most likely to produce massive economic damage when they do burn. Imagine instead WUI residents clustered in denser enclaves, surrounded by open space, protected from wildfires—and still able to enjoy their natural setting. The undeveloped country around these communities might still burn on occasion, but such fires wouldn’t need to be fought as aggressively, if at all. Leaving major tracts of wildland undeveloped would, in effect, create inverse bull’s-eyes: large areas where fires don’t cause economic devastation or loss of life.
A plan for denser, safer WUI housing should start with areas that are already partially developed, or that have recently burned and are being redeveloped. Compared with WUI sprawl, these resilient housing nodes could accommodate as many or more residents—but without the need for large hidden subsidies and with less risk of facing a sudden, terrifying disaster. California can’t stop people from moving into the state’s beautiful, wild terrain. But it shouldn’t keep subsidizing the riskiest, most expensive development patterns. Instead, it should help residents make smarter, and safer, housing choices.
Top Photo: The 2022 Oak Fire in California’s Yosemite region burned 19,000 acres and destroyed nearly 200 structures, including this home. (NOAH BERGER/AP PHOTO)
