Loss of costly homes in urban areas made LA wildfires a financial disaster
Loss of costly homes in urban areas made LA wildfires a financial disaster
When the Eaton and Palisades wildfires sparked in Los Angeles last month, preliminary estimates said they could be the most expensive in U.S. history.
A new report from the University of California, Los Angeles, contains more concrete numbers. It says the Palisades and Eaton fires likely caused $75 billion just in insured losses. That’s three times as much as the next four most destructive California wildfires combined.
The primary reason: They were urban fires. The more structures that burn, the higher the costs. The thing is, urban fires aren’t a new problem.
“What we’re really talking about is a return to the urban conflagrations of the 19th century,” said Michele Steinberg with the National Fire Protection Association.
She said the majority of the homes in the Eaton fire’s footprint, for example, were built before 1950 — long before modern fire codes, making them more flammable.
“These are legacy structures with legacy vegetation on small lots really close together … like a set of dominoes … just ripping through these structural fuels,” Steinberg said.
But it’s more expensive when those old homes burn in 2025 because those homes — and California in general — became more expensive, said economist Tom Corringham. He’s with the Scripps Institution of Oceanography at the University of California, San Diego.
“The fact that the prices have risen in the last five years, that really drives the increase in costs associated with this event,” he said.
Corringham said not only are the houses more expensive, but there are just more houses.
“Los Angeles has grown so dramatically in the last 50 years. The increase in population within these hazard zones … really raise that headline number,” he said.
And that headline number might actually be too small.
UCLA economist Zhiyun Li, who authored the report, said she had to estimate the fires’ financial toll based on the number of people who had private insurance in other recent fires.
“But that may not be true in the new reality because more people are losing their private insurance,” she said.
So the real total cost of the disaster might be even higher.
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