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Summary: Wildfire Costs, New Development, and Rising Temperatures

Spring 2013

Costs | Firewise and Case Studies |WUI Growth | State Studies | White Paper | Presentation | Journal Articles


This page summarizes research by Headwaters Economics on the rising costs of wildland fires in the West. We have done extensive analysis in several areas:

  • A study on why wildfires are becoming more severe and expensive, and how the protection of homes in the Wildland-Urban Interface has added to these costs.
  • A report on whether Firewise reduces suppression costs, in addition to its safety mission; and eight case studies to better understand whether and how communities are altering the way they confront wildfire risk
  • The potential for new home development in the Wildland-Urban Interface (WUI) at the county and state level.
  • State-specific research on the impact of new homes and temperature change on wildfire suppression costs.
  • Completed a White Paper with suggestions for how future firefighting costs best can be controlled.

Why Wildfires Are Becoming More Expensive

Wildfires are getting larger and causing more damage. Headwaters Economics produced this report as part of our long-term commitment to better understand and address why wildfires are becoming more severe and expensive.

The report also describes how the protection of homes in the Wildland-Urban Interface (WUI) has added to these costs and concludes with a brief discussion of solutions that may help control escalating costs. We worked with Ross Gorte, Ph.D., to produce the report. Gorte, a retired Senior Policy Analyst at the Congressional Research Service, is now an Affiliate Research Professor at the University of New Hampshire.

Wildfire threat and protection costs are likely to rise because of climate change and continued home development. Currently, the majority of private wildlands are undeveloped; only about 16 percent of the WUI in the West is now developed, and the remaining 84 percent is available for development. The potential development of these lands is a state and local responsibility, but their development would significantly increase the federal cost of wildfire protection.

Firewise and Case Studies

The Firewise Communities/USA® Recognition Program Firewise focuses on increasing safety and was not designed to lower suppression costs. Our research finds no evidence of a relationship between wildfire suppression costs and Firewise participation.

This lack of evidence that Firewise reduces wildfire suppression costs suggests that policy makers attempting to address future costs are better served focusing on other solutions such as limiting future development in high risk areas.

This finding is especially important in light of our recent report on eight cities and counties across the West that studied whether and how communities are altering the way they confront wildfire risk.

The case studies highlight that western communities are doing little to respond to dangers from future wildfires—compared to what they would need to do to enhance public safety and reduce future suppression costs.

Potential for WUI Development

A new set of interactive maps and tables show that 84 percent of private lands near fire-prone public forests in the West today remain undeveloped, and new building in these areas will increase future firefighting costs for U.S. taxpayers by billions of dollars.

The report uses 2010 Census data to provide both county-by-county and state-level analysis and rankings for the 11 continental western states.

National wildfire fighting costs have averaged $1.8 billion annually for the past five years, and the 2012 fire season was among the worst on record for many regions and states. If just half of the WUI is developed in the future, annual firefighting costs could explode to between $2.3 and $4.3 billion. By comparison, the Forest Service’s total average annual budget is $5.5 billion.

The study identifies where housing has occurred adjacent to fire-prone wildlands in the West using maps of housing density created at the scale of 2010 Census blocks. Forested areas where residential development (census blocks with mean lot sizes less than 40 acres) occurred within 500 meters of public lands were identified as developed wildland-urban interface. This study replicates, using more recent housing and public lands data, the methods described in a June 2008 Journal of Forestry manuscript.

State Specific Studies on Costs, Housing, and Temperature Change

Headwaters Economics has studied wildfires and costs in greater detail in three states–Montana, the California Sierra Nevada, and Oregon. Details include:

  • A Montana report found that, statewide, protecting homes from wildfires costs an average of $28 million annually. If development near fire-prone forests continues, costs to protect homes likely will rise to $40 million by 2025. A 1º F increase in summer temperatures would at least double home protection costs. Additional development and hotter summers combined could increase the annual cost to exceed $80 million by 2025.
  • Research in California’s Sierra Nevada found that rising average summer temperatures are strongly associated with an increase in acres burned. Within the study area, an annual increase in average summer temperature of 1º F is associated with a 35 percent growth in area burned.
  • An Oregon study found that a rise in average summer temperature of 1º F is associated with an increase of 420 wildfires–a large effect given that, on average, 1,800 wildfires burn in Oregon per year.

White Paper on Ideas for Controlling Fire Suppression Costs

The White Paper, Solutions to the Rising Costs of Fighting Fires in the Wildland-Urban Interface (580K PDF) examines:

  • Ideas for Controlling the Rising Cost of Fighting Fires.
  • Why the Cost of Fighting Wildfires Continues to Escalate.
  • The Wildland-Urban Interface Significant Contribution to Wildfire Costs.
  • Who Pays Firefighting Costs?

Firefighting costs will continue to escalate unless there is a financial disincentive to building homes on fire-prone lands. The report offers ten ideas for controlling the rising cost of protecting homes from wildland fires:

Average Annual Cost of Protecting Homes from Wildfires in Montana

Chart: Average Annual Cost of Protecting Homes from Wildfires in Montana

  1. Mapping: Publish Maps Identifying Areas with High Probability of Wildland Fires.
  2. Education: Increase Awareness of the Financial Consequences of Home Building in Fire-Prone Areas.
  3. Redirecting Federal Aid towards Land Use Planning: Provide Technical Assistance and Financial Incentives to Help Local Governments Direct Future Development Away from the Wildland-Urban Interface.
  4. Cost Share Agreements: Add Incentives for Counties to Sign Agreements that Share the Costs of Wildland Firefighting between Local and Federal Entities.
  5. Land Acquisition: Purchase Lands or Easements on Lands that are Fire-Prone and at Risk of Conversion to Development.
  6. A National Fire Insurance and Mortgage Program: Apply Lessons from Efforts to Prevent Development in Floodplains.
  7. Insurance: Allow Insurance Companies to Charge Higher Premiums in Fire-Prone Areas.
  8. Zoning: Limit Development in the Wildland-Urban Interface with Local Planning and Zoning Ordinances.
  9. Eliminate Mortgage Interest Deductions: Eliminate Home Interest Mortgage Deductions for New Homes in the Wildland-Urban Interface.
  10. Reduce Federal Firefighting Budgets: Induce Federal Land Managers to Shift More of the Cost of Wildland Firefighting to Local Governments.

The pros and cons of each idea are explored, along with a discussion of the likelihood that each idea will succeed in controlling future firefighting costs.

Addressing the issue of ever-escalating fire suppression expenses could achieve a number of related public policy goals: increasing fiscal responsibility, introducing a fairer and more equitable distribution of those costs among those benefiting from wildfire protection, and improving the safety of future homeowners and wildland firefighters.

To succeed, several ideas will have to be applied concurrently, and they will require government support and direction. The tremendous scale of the problem (in terms of acres, ownership complexity and cost) means that federal government will have to play a role. The involvement from Congress and the federal agencies is also important because the current system of incentives is part of the problem. By spending large sums every year to protect homes from wildfires, the federal government is subsidizing the true cost of development. Without financial disincentives to building homes on dangerous, fire-prone lands, the problem will get worse.

At the least, the proposed solutions presented in the report (580K PDF) should begin a public dialogue on the need for policies that will decrease the future cost of protecting homes from wildfires. At the best, the ideas offer an array of options for the Forest Service, Bureau of Land Management, and Congress to explore and adopt.

Presentation: Risks, Costs, and Solutions

Headwaters Economics has prepared an extensive slideshow presentation (PDF) that overviews the factors behind the growing costs and risks associated with larger and and more intense wildfires. The presentation then discusses how the protection of homes in the Wildland-Urban Interface (WUI) has added to these costs and risks; concluding with a brief analysis of potential solutions.

Journal Articles on Wildfire Costs

Headwaters Economics has published two journal articles related to our wildfire costs research.

Read a May 27, 2014 Op-Ed carried by the Denver Post on the need to better plan for wildfire costs.

Hear an interview with our Director, Ray Rasker, on public radio’s To the Point (“Wildfires Rage across the West” July 2 2012).|titles=To
For more information, contact:
Ray Rasker, Ph.D. at 406.570.7044 or [email]