Wildfire Threat Grows with Housing Sprawl

The Wallow wildfire that recently swept Arizona’s Sitgreaves National Forest was the largest in the state’s history.

Hundreds of mostly well-to-do homes were threatened, roughly 538,000 acres burned, and the cost of containing the fire — $109 million, though the vast majority of that is federal funds —used up the cash-strapped state’s entire fire suppression budget for the year.

A forest burns during a backburn operation to fight the Wallow Firen in Nutrioso, Arizona.
A forest burns during a backburn operation to fight the Wallow Firen in Nutrioso, Arizona.

Across the arid American West, from the Dakotas to the Pacific coast, the stories are similar. Wildfires that burn more than 100,000 acres — a rare occurrence 30 years ago — are now the rule rather than the exception, according to a 2008 paper by the National Center for Policy Analysis. Some states, like Texas, are probably facing their worst wildfire year on record.

Whether this enormous increase is due to climate change, human habitation in the semi-arid landscape, bad forest management policy or some combination of these factors, the cost of suppressing, containing and preventing wildfire on national land is only going to grow, say government agencies and outside observers. Taxpayers will probably end up shouldering most of the costs, say experts.

"Whenever something goes wrong, there’s a desire to push the costs onto someone else," says Robert Hartwig, president of the Insurance Information Institute. "The gold standard of costs is the federal government."

Compounding the problem is the fact that suburbs and exurbs in many Western states increasingly stretch into regions the U.S. Forest Service calls the wildland-urban interface or WUI (colloquially called Whoo-Ee).

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Many people with money dream about having second homes in the woods or mountains, says Diane Denenberg, spokesperson for the Western Forrestry Leadership Coalition, and many of these ecosystems are historically fire-prone. (A 2006 study by the US Forest Service found that WUI lands contained 44.8 million houses, a figure no doubt substantial larger today.)

Population growth, combined with both economic and political pressures, means that this sort of development is likely to continue, says Hartwig.

All this has led to a “pattern of development that makes no sense,” says Hartwig. “Politicians have an incentive to attract people [to their states], and as long as the federal government picks up the cost, all is good.”

Furthermore, state and federal resources that were set aside to protect and maintain healthy forests are now sometimes used to protect private property, says Pat Durland, a wildlife consultant and former wildfire fighter on federal lands.

Stormy Weather - A CNBC Special Report
Stormy Weather - A CNBC Special Report

In 2010 — the most recent year with figures available — the U.S. Forest Service spent $897.6 million on fire suppression, two to three times that of the late 1990s.

Nationwide, fire losses grew from $13 billion in 2000 to $28 billion in 2009, though these numbers include all fire-related homeowner losses, according to the insurance institute.

That’s only the federal government’s share, however. Depending on what land a wildfire crosses, substantial costs are borne by state and local municipalities as well. In Colorado, for example, the state’s responsibility grew from $729,678 in 2001 to $10,674,957 in 2010, albeit with substantial fluctuation in between.

The federal figure probably understates the problem, says Denenberg. The advertised costs of suppression — i.e. extinguishing fires — don’t take into account the costs of land recovery, loss of tourism dollars and fire prevention, she says.

California Fires
California Fires

The U.S. Forest Service conducted a study in 2009, predicting longer and bigger fire seasons throughout the West, and escalating costs fighting them. (Some think tanks claim that U.S. forest management policy, in particular the suppression of commercial logging, contributes to the wildfire menace.)

While the housing crash has slowed development, it’s virtually inevitable that it will pick up again, says Hartwig.

“The slowdown is just a hiccup," he says. "This, too, shall pass. People will discover that they still want to live out there.”

One way to reduce insurance and municipal costs is to build and landscape property to reduce the chances of a fire reaching a house, says Durland.

Over the long term, more homeowner may be forced by limited state resources — and a growing number of natural fires — to become more and more responsible for their own protection, he says.

"Ninety-eight percent of the time [firefighters] will be there," says Durland. What about that other 2 percent of the time? "You’ll have to prepare on your own," he says.