Fire Risk and California Settlement Patterns

As Californians we need to re-think where we build and rebuild our towns and cities.

Paradise, California was largely destroyed by the Camp Fire on November 8, 2018. The immediate reaction of community leaders was ‘We will rebuild.’ The question I raised with my students was: ‘Have the leaders and residents of Paradise consulted with the insurance companies that hold their fire-insurance policies? I am not so sure that rebuilding will be feasible.’

Fire Risk Zones in the Sierra Nevada foothills near Paradise (map by Pietro)

I quickly sketched the state of California on the whiteboard and then hatched out the areas where we cannot build and probably should not rebuild: deserts far from jobs, and places with extreme fire risk. My students wanted more specifics, and I want to convince them of the value of GIS analysis; so I obtained the fire-risk maps from the California State Fire Marshal and combined them with maps of settlement patterns (pink), highways (red and brown lines), and public lands.

Paradise is in the midst of a “Very High Risk” zone. It is also surrounded by steep terrain, and has few roads in and out. In other words, the qualities that make the setting appealing to many of the residents are the exact same qualities a fire marshal and an insurance assessor regard as a death trap.

I expected that insurance firms would pay out for the 2018 destruction of property. But I also expected them to follow the news as CalFire declared that our state now has a 12-month fire ‘season’ (meaning that it is no longer seasonal at all) and the insurance firms would begin cancelling policies or increasing premiums radically to reflect actual risk.

This is indeed what insurance firms attempted to do. However, we have a State Department of Insurance which is actively resisting this trend. SB 824 (2018) authorized the Insurance Commissioner to impose a one-year moratorium on policy-cancellations. In August 2021 this moratorium was extended to homeowners in areas near the Caldor Fire near South Lake Tahoe, and owners near the Cache and Fawn fires in September. This policy means that, for the moment, homeowners can rebuild and remain in dry forest areas with steep terrain, and expect firefighters to put themselves in harm’s way to protect people and property in areas of known danger.

In general, I agree with the practice of regulating insurance firms. We created a powerful California Insurance Commissioner office in 1988 due to anti-competitive practices in multiple insurance firms. Firms working in collusion to maximize profits are not following market logic; colluding firms brought regulation upon themselves.

But I wish insurance firms had operated competitively, because here is a place where market-logic would be helpful. If a location has become extremely hazardous for permanent settlement, the cost of insuring that property should reflect the actual risk that it will burn.

For the short term, a social justice question overrides purely cold calculations of risk: many of the residents of high-risk fire zones in the Coast Ranges and Sierra Nevada are relatively poor, and often retirees. They do not deserve to have the value of their life savings destroyed at very the moment when we all learn the higher risks of fire in California. A one-year moratorium on policy cancellations is a mercy for those with limited means.

But for the long term, both public and private agencies need to seriously reconsider where permanent development should be allowed in California. I know that many people in rural counties deeply resent regulation. It would be inappropriate to require local officials and planners to become targets of hatred and abuse. But opposition to regulation should be applied consistently: private firms should be allowed to price loans and insurance policies to reflect the actual risks to property. CalFire should also have the right to say that it is unwilling to risk the lives of firefighters to protect properties built (or rebuilt) in locations that we know are dangerous.