Governments and Homeowners Are Burning Through Cash Due to California's Devastating Wildfires

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The rampaging wildfires in the West are also burning a hole in the wallets of governments and homeowners.

Amid a deep, multi-year drought that has left forests tinder-dry, 2015 is on track to be among the most destructive years for wildfires. California alone has had to battle more than 5,000 individual blazes, while across the West, nearly 9 million acres have burned.

"We're all sort of astonished at how expensive it is," said Cassandra Moseley, director of the Institute for a Sustainable Environment at the University of Oregon. "We're in these stages now where it's really hard to get enough people and enough resources to all of the fires when they're all burning at once."

The Valley Fire, about 100 miles north of San Francisco, ballooned to tens of thousands of acres within hours of being touched off Saturday. It swept through two small towns over the weekend, reducing entire stretches of neighborhoods to ash. It's not the year's biggest, but it may end up being the most destructive.

And the costs of containing those fires are mounting, topping $1 billion in every year since 2006, according to the National Interagency Fire Center (NIFC). A single fire in 2014, the 97,000-acre King Fire in California, cost almost $120 million to bring under control.

All that money can bring a short-term boost to a rural community's bottom line, but leave behind an iffy job market when the fires are put out, Moseley said.

"In a busy fire season, they're giving their local government employees more hours," Moseley said. "They're getting more money. The contractors they hire sometimes, some of those are local. You see them buying gasoline, and they're buying food, and sometimes they're hiring local folks to make sandwiches for them."

Related: In Photos: Deadly Wildfire Leaves Trail of Death and Destruction in Northern California

But that boost doesn't help other parts of the economy, like tourism or recreation, she said. And after the crisis passes, there can be wild swings in the local job market.

"You see a short-term increase, and then you see what is more than a downturn afterwards — it's an instability," Moseley said. "There are highs and lows that are bigger than you would see normally."

The effect is hardly a ripple in California's $2.2 trillion economy, and wouldn't likely be noticed even in a big metropolitan area like Los Angeles, she said. But it can be a big deal in a small town, "and how it gets spent affects them."

The US Forest Service recently complained that half its budget now goes to firefighting, squeezing out money for other projects—like preventing new fires. Thanks to climate change, a typical fire season is nearly three months longer than it was in 1970, and there's less water available to fight a blaze, the agency said.

Between 1985 and 2000, there were only four years when wildfires burned more than 5 million acres, according to NIFC statistics. Since 2000, only five years have seen fewer than 5 million acres burned.

And with more people building homes on the edges of the forest, the odds of a catastrophe are going up. Nearly 2 million California households are now at high or extreme risk of wildfire, according to the industry-funded Insurance Information Institute.

"It is the most populous state in the country," said Robert Hartwig, the institute's president. "It is one that over the last several decades has seen rapid population growth, and a rapid expansion of the population into that urban-wildfire interface. This is a direct conflict with Mother Nature, and it was literally a tinderbox that someday was bound to explode. And in fact, that's exactly what is happening right now."

The worst losses on record are still from the 1991 wildfire that swept through a neighborhood in Oakland, which cost $1.7 billion — or $2.7 billion in 2014 dollars — and seven of the 10 most expensive fires in recent years were in California, the institute reports.

It's too early to determine how bad this year will be, Hartwig said. Wildfire season typically doesn't peak until October, he said. There's not likely to be a single disaster as bad as the Oakland fires, "but it's likely to be the worst wildfire season in terms of insured losses in California in a number of years."

Related: The US Forest Service Is Burning Through Its Budget Fighting Wildfires

Nearly all the homes are rebuilt with that insurance money. Older homes often have to be improved to meet modern fire codes, which can make them more fire-resistant in the future. But the increasing risk is driving up insurance rates in California, sometimes by 5 to 6 percent a year, Hartwig said.

It's a problem that can be costly to the industry, but one over which it has little control.

"At the end of the day, it is going to be local authorities who determine where people can build and how," he said. "It is the duty of insurers not to tell people that they can't live there, but to tell them how much it will cost to insure their homes."

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