Fighting wildfires: moral hazards and Mother Nature
If Americans insist on building in natural danger zones, government should not subsidize their folly, writes Froma Harrop.
We call events caused by extreme weather “natural disasters” when they hit human-built environments. Had there been no shoreline civilization in Superstorm Sandy’s East Coast path, we would not have called the happening a “natural disaster,” but “nature.” The whole thing would have been little more than an exceptionally rainy day.
Wildfires have raced across the American Southwest for always. And until modern firefighting techniques were developed, the thing to do when the flames approached was to get out of the way.
Meanwhile, humans insisted on building homes with enchanting Western views in fire-prone areas. That changed the stakes in dealing with these conflagrations, turning wildfires into natural disasters. And after 19 brave Arizona firefighters recently died trying to save construction from a fire, a human tragedy.
These expanding rural developments have themselves made the fires worse. In the dry West, naturally occurring brush fires are now quickly put out to protect houses that weren’t there 50 years ago. This creates piles of flammable wood — and waste left by logging operations adds more fuel. And so a stray bolt of lightning sets off an inferno.
Moral hazard is a theory in economics whereby investors will take more risks when others bear the cost of failure. Example: Banks make crazy gambles when they think the taxpayers will bail them out if things don’t work as planned.
Our society has long encouraged Americans to take a flyer with Mother Nature by offering to make them whole against her fury. Federally subsidized flood insurance, for instance, moves risk from the beachfront property owner to the government.
Residents in the arid rural West expect someone to put out the fires threatening their dream homes, no matter how out-of-control the blaze. Perhaps as waterlogged Easterners and Southerners are learning, Western assumptions that government will ride to the rescue in expected natural disasters — whether through firefighting or public money to rebuild — will have to change.
Making the task harder is the West’s role as America’s chief population magnet. Millions of homes continue to be built in its fire-prone areas.
But there are ways to discourage this construction, according to Headwaters Economics, a research group working on Western development issues out of Bozeman, Mont. They require addressing the problem of moral hazard.
As the researchers say in a report, “A large portion of the expenses related to protecting private structures is borne by the federal and state taxpayers, and not enough of the costs are paid by the landowner or local jurisdiction making the land-use decisions.”
A developer sends the county a proposal for a subdivision with great views. It is next to Forest Service, federal Bureau of Land Management or state lands, the report explains, “on what is known to be a dangerous, fire-prone landscape.” Do the county commissioners even consider whether they can afford to protect these homes from wildfires? Probably not.
“With the Forest Service and the BLM spending more than $3 billion every year on fire suppression,” the report says, “and with help from state agencies and FEMA (Federal Emergency Management Agency), there is not enough of a financial disincentive to persuade county governments to change the scale, pace and pattern of development away from fire-prone lands.”
A solution is to force the local government that says, “Go forth and build on a tinderbox,” to take on more of the burden of paying for fire protection.
If Americans insist on building in known natural danger zones, government should not subsidize their folly. And as the awful loss of the Arizona firefighters shows, the price for bad policy is denominated in far more than taxpayer dollars.
© , The Providence Journal Co.
Froma Harrop's column appears regularly on editorial pages of The Times. Her email address is email@example.com