Over the past week, fires have ravaged greater Los Angeles, killing at least 10 people, destroying more than 10,000 buildings, scorching more than 35,000 acres, and forcing the evacuation of at least 180,000 residents. The dry Santa Ana winds continue to blow, threatening to spread the destruction further. As I write this, a backpack stuffed with mementos, documents, and a water bottle sits next to the front door of my West Los Angeles apartment.
Commentators wasted no time trying to find a villain. Was it Mayor Karen Bass, who had left the city for Ghana before the fires began? Doubtful. What about budget cuts to the Los Angeles Fire Department? In fact, its budget recently grew by $50 million. Was it a 2022 donation of firefighter boots and helmets to Ukraine? Water is in short supply, not uniforms.
The real story of the wildfires isn’t about malice or incompetence. It’s about well-intentioned policies with unintended consequences.
Take insurance—a trillion-dollar industry built to identify risks, particularly from disasters such as wildfires. Insurance companies communicate this risk to homeowners through higher premiums, providing them with useful information and incentives. People may think twice about moving to a fire-prone area if they see the danger reflected in a fee.
But in 1988, California voters passed Proposition 103, arbitrarily reducing rates by 20 percent and subjecting future rate increases to public oversight. Nobody likes high premiums, of course. But the politicization of risk has been a catastrophe. Artificially low premiums encouraged more Californians to live in the state’s most dangerous areas. And they reduced the incentive for homeowners to protect their houses, such as by installing fire-resistant roofs and siding materials.
Decades of worsening climate risk alongside suppressed premiums have prompted many insurers to drop coverage altogether. Just last summer, State Farm dropped 1,600 home-insurance plans in Pacific Palisades. Earlier this week, most of the neighborhood was burning.
Many Californians in high-risk areas have been forced to depend on the California FAIR Plan—a public insurer of last resort. In 2023, the plan covered an estimated $284 billion in home value. In 2024, that exposure increased by 61 percent. Within the next few years, California taxpayers could be on the hook for more than a trillion dollars. The state insurance commissioner is scrambling to bring insurers back. But it may be too little, too late.
Artificially low premiums have also spurred new housing production in fire-prone regions on the edges of cities like Los Angeles. From 1990 to 2020, California built nearly 1.5 million homes in the wildlife-urban interface, putting millions of residents in the path of wildfires. Policy didn’t just pull Californians into dangerous areas. It also pushed them out of safer ones. Over the past 70 years, zoning has made housing expensive and difficult to build in cities, which are generally more resilient to climate change than any other part of the state.
The classic urban neighborhood in America—carefully maintained park, interconnected street grid, masonry-clad shops and apartments—is perhaps the most wildfire-resistant pattern of growth. By contrast, the modern American suburb—think stick-frame homes along cul-de-sacs that bump up against unmaintained natural lands—may be the least. Several of L.A.’s hardest-hit neighborhoods resemble this model.
Infill townhouses, apartments, and shops could help keep Californians out of harm’s way, but they are illegal to build in most California neighborhoods. And even where new infill housing is allowed, it is often subject to lengthy environmental reviews, which NIMBYs easily weaponize. And if you want to build anywhere near the coast—the only part of greater Los Angeles not currently under a red-flag warning—prepare for months of added delays.
In fairness, the state has made some progress. In 2008, California lawmakers passed S.B. 375, which directs planning agencies to reform land-use and transportation policy in order to facilitate housing production in long-settled areas. But this remains purely advisory—yet another plan on a shelf, in a state with too many plans and too little implementation.
In recent years, Los Angeles has also taken steps to fix itself. Thanks in part to state lawmakers and a rising local YIMBY movement, building homes in existing neighborhoods has been somewhat streamlined. But reform isn’t going to get any easier. Our city started the week with a housing shortage in the hundreds of thousands. Now it’s ending the week with thousands of homes destroyed, and thousands of newly homeless families.
Once the fires are out, California will need to build, fast. This disaster can teach it how, if policy makers will listen.
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