When fire risk soars with developments, can governments control the costs?

Residents have begun to trickle back into the Black Forest neighborhood of Colorado Springs, Colo., where last week a wind-whipped wildfire forced the evacuation of about 40,000 people. Having claimed more than 500 structures and two lives, it is considered the most destructive fire in the state's history.

Given the extent of the damage, it may take time for another, equally important truth to sink in: The destruction could have been far worse.

"I've been in this business, and this region, for over 10 years, and I can say from experience: Colorado Springs is one of the most progressive, well-prepared cities I've seen in terms of wildfire mitigation," said Andrew Notbohm, wildfire mitigation specialist with Boulder County. The city has a strong public information program, action plans and building codes, all of which no doubt saved lives and structures, he said.

The problem, he added, is that when wilderness and civilization exist in close contact, "you're always going to be rolling the dice when it comes to fire danger."

In the town of Colorado Springs, nearly 35,000 homes are located in what forest managers term the wildland-urban interface (WUI), a buffer zone between wilderness and settled land where trees and buildings nestle shoulder to shoulder. That a city with such a robust, even exemplary fire mitigation program would see record destruction from not one, but two fires in two years -- the Waldo Canyon fire in 2012, followed by the Black Forest fire this year -- highlights the risk endemic to living in this space.

Like the forests in much of the United States, and the West in particular, the WUI has become more fire-prone over the past several decades, a trend that is projected to increase with climate change (ClimateWire, June 18). Yet according to demographers, the rising danger has not deterred people from moving into the WUI in steady numbers. In El Paso County, home to Colorado Springs, 32 percent of the county's interface is inhabited; in Boulder County to the north, that figure is already above 50 percent.


Why should people be moving into fire-hazard zones at a time when the danger from fire has never been greater? Part of the reason is that the costs of protecting against fire are shouldered by state, local and federal agencies, rather than the homeowners who make the decision to move into the WUI, experts say.

Planning helps, but not if it's late

Despite the fact that the Federal Emergency Management Agency and the Forest Service are primary respondents to big events like the Black Forest fire, the federal government "has no power to tell people where they can and can't live," said Pam Leschak, program manager with the Forest Service's Fire Adapted Communities program.

The best preventive role the federal government can play is in working with state and local partners to promote public awareness, she said.

States, counties and towns, on the other hand, have wide jurisdiction to control development in the WUI, through zoning, permitting and the issuance of building codes.

Like El Paso County, Boulder County has seen major fires in the past two decades, including the third most destructive in 2010. But "the real irony is that we're one of the most progressive bodies in the country" when it comes to controlling for WUI development, said Gary Goodell, chief building official for the county.

"We haven't approved a new mountain subdivision since the 1970s," he said. "What growth we've had, we've encouraged to concentrate in our cities."

The decision to stem growth of development in the WUI came from a convergence of factors, he said. "In the early 1990s, our county commissioners were receiving petitions from people in the mountains saying the land had reached carrying capacity. There were concerns about wells being exhausted, as well as the visual impacts of land scarring from new roads and driveways."

Fire activity had also begun to pick up, culminating in a year of record drought in 1988 that set off wildfires across the West, particularly in Yellowstone National Park. Pretty soon, wildfire mitigation had been thrown into the mix of criteria needed for new site plan reviews, and the process had become so stringent that few new properties were being developed.

Insurance may play 'critical role'

Yet much of the WUI in Colorado, along with states like Washington, Oregon and California, is already developed, and the costs of protecting that development are rising fast. In Montana, the cost of protecting homes roughly doubles with each 1 degree Fahrenheit rise in temperature, according to the nonprofit group Headwaters Economics.

On Monday, Colorado Gov. John Hickenlooper (D) convened a state task force to develop limits on development in burn zones and fees to existing structures, The Denver Post reported. The task force also suggested tougher building codes and mandatory disclosure of wildfire risk.

To help offset the costs of fire to state, local and federal agencies, the task force has two recommendations: a $150-per-year fee on all properties located in burn zones and a mandatory state-run fire insurance program that could charge higher premiums than current market rates.

"Insurance is going to have to play a critical role in this process," said Barbara Kelley, director of the Colorado Department of Regulatory Agencies, speaking to the Post after the task force convened Monday.

So far, however, the role of insurers has been unevenly played. While costs due to individual events have occasionally risen to eye-popping levels, causing momentary spikes in insurance premiums, wildfires have not been a constant enough threat to uniformly push up rates for people living in the WUI.

The story of modern-day fire damage might have begun in 1991, when a small grass fire outside Oakland, Calif., roared into a wind-fueled inferno that consumed 3,000 homes and killed 25 people. It was America's first billion-dollar wildfire.

The wavy arc of wildfire insurance

Since then, damages have been on a wavy arc, as losses surge in dry years when flames reach settlements and disappear in others. Despite fire's intermittency, insurers see a clear trend of more numerous wildfires as temperatures, and the presence of people, go up. It's a mix that makes fire one of the least natural hazards.

Just 5 percent of California wildfires were ignited by lightning between 2000 and 2005, according to Munich Re, a global reinsurer that sees fire as a predominantly human-created catastrophe. Cigarettes, electricity lines, arson and even sunlight through broken glass can start an inferno. The insurer identifies vehicles as the cause of 14 percent of California fires in that time period, while equipment ignited 27 percent and burning trash started 10 percent.

Those sparks, combined with drier conditions, have helped lead the nation into a riskier era. Since that first fire reached $1 billion in damage 22 years ago, six more have matched or exceeded that record. The most expensive one happened in 2003 when a family of fires inflicted losses of $3.5 billion in Southern California. The flames consumed 3,600 homes and killed 22 people.

"We see definitely a trend that we have more of these events," said Peter Hoppe, who heads Munich Re's research on global risks. "One of the reasons certainly is that more people live in areas which are at risk in terms of wildfires, so there's a higher probability that people interfere with these dry conditions and start a fire. But on the other hand, we also see an increasing frequency of dry spells."

Hoppe, however, said there's a "paradox" between climatic factors that enhance fires and increased human awareness around preventing them. Although conditions are more favorable for fires, building techniques, fire suppression and education aimed at avoiding them appear to be preventing an explosion of economic losses over a period of decades, he said.

"There is no one-size-fits-all answer when it comes to whether the rise in population will increase the wildfire hazard in the future," said a Munich Re report on extreme weather released last year. "Human influence will increase in sparsely populated areas, as more and more people settle in them. However, this does not invariably mean that there will be more fires caused by people, since it is to be hoped that behavioral patterns will further change for the better with time."

Insurers distracted by hurricanes

But others believe the expansion of development into the forests bordering cities is an invitation for more flames.

Ray Rasker, executive director of Headwaters Economics, said insurers could help reduce that risk by raising their premiums in the most hazardous policies. But so far, wildfire "just isn't a big issue for insurers."

He's right that insurers see bigger hazards than fires.

Last year, when Colorado fires in High Park and Waldo Canyon inflicted $450 million in damages to insurers, the companies faced more dire situations along the Atlantic Coast and in the Midwest. Superstorm Sandy hit them with losses of $27 billion, while thunderstorms cost insurers $14 billion in 2012, making fire barely a blip.

"The potential magnitude of a wildfire loss, even in a worst-case scenario, is nowhere near what it is in terms of the worst-case scenarios for hurricanes," said Robert Hartwig, chief economist and president of the Insurance Information Institute.

He notes that in fire country, losses are almost exclusively residential, while assets exposed to hurricanes include more businesses in densely populated urban areas.

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