The Burning of (Parts of) Los Angeles
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the (forthcoming) March/April 2025 issue
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“The town [Los Angeles] is certainly finely situated, with a bay in front, and an amphitheater of hills behind. The only thing which diminishes its beauty is that the hills have no large trees upon them, they having been all burnt by a great fire...”
—Richard Henry Dana, Two Years Before the Mast, 1840
Fire is not stranger to Los Angeles.
Knowing this, and despite the headlines proclaiming “Los Angles Is Burning,” it is important to understand the actual scope of the Los Angeles fires. The Palisades Fire burned about 24,000 acres—in a city of more than 320,000 acres. The Eaton Fire, which was outside the city but in Los Angeles County, burned about 14,000 aces, mostly in Pasadena and Altadena, in a county of more than 3 million acres. These facts don’t lessen the trauma of the tragedy. I know families that were forced to flee and others with no house to return to. But it should make us think more deeply about the fires, to realize that this is not a story about Los Angeles or even about California—despite what President Donald Trump and his cronies say.
The causes are both natural and human.
First, the natural causes: Between May 2024 and January 2025, Los Angeles received only 0.3 inches of rain—in a period that usually sees six inches. The delay of the rainy season into January is unprecedented in the 150 years of L.A. weather history. This extended dry period followed two years of heavy rainfall, creating an unusually lush vegetation cover. Then the hurricane-force Santa Ana winds in early January, reaching more than 75 mph, turned what would have been a serious fire into an inferno.
Fires in California are ranked on three dimensions: territory burned, structures destroyed, and death toll. The Palisades and Eaton Fires, as bad as they were, do not rank among the 25 largest fires in California by area burned, either individually or together. However, both are in the top 10 in terms of structures destroyed (more than 6,600 structures were leveled by the Palisades Fire, and more than 9,400 in the Eaton Fire), and the Eaton Fire is in the top 10 by number of deaths (17 people died).
Although climate change is the overarching cause of the growing number of weather-driven catastrophes, each event has its own dynamics. For Los Angeles, Malibu, and the surrounding communities, the human cause is the combination of profit-seeking developers, abetted by building trades unions, and the demand by wealthy Angelinos for residences—mansions in much of the Pacific Palisades—with “views.” In the Palisades, there are great views—and very few ways out on the narrow and curvy streets in an emergency, where fleeing residents often clog the path of firefighters.
Power lines are another component of the human causes in California fires, and they are purportedly implicated in the Eaton Fire. If proved out, it would be yet another example of Southern California Edison’s (SCE’s) continued failure to operate its electrical grid safely. Of course, it’s costly to bury wires, and investors look askance at dividend cuts. SCE’s parent company pays a nice annual dividend of almost 6%.
In Los Angeles County, whose population grew by 60% over the past six decades, there has been a sustained push into the chaparral-covered canyons and hillsides that Richard Henry Dana saw in 1840. Chaparral, which is an ecological community of different kinds of shrubby plants, does well in the long, dry summers and moist winters of climates such as Southern California. It also requires fire to propagate, which allows the plants to grow and spread rapidly, and the ecosystem has evolved to include fire. Hence building in these areas invites the risk of fire. But before we intervened in the natural cycle, the fires required by chaparral occurred every 30–50 years. Now they occur more than once a decade. Further, the fires that assisted chaparral in propagation were often less intense than those occurring today.
The Myths
Before assessing the possible “solutions,” it’s worth a few paragraphs debunking the myths propagated—faster than chaparral—by Trump and others. First, was the L.A. Fire Department (LAFD) budget actually cut, with the result being too few firefighters and too few fire trucks? In fact, the LAFD’s budget was increased 7.1% ($58.4 million) in the 2024–2025 budget, including significant salary raises for personnel. There was also increased money allocated for the purchase of new equipment. But there is an interesting and largely overlooked story here: The cost of fire trucks—pumpers and hook-and-ladders—has increased “hundreds of thousands of dollars for the same engine bought pre-COVID,” according to Fire Apparatus & Emergency Equipment Magazine. What happened? A private equity group, American Investor Partners, has bought up and consolidated many of the previously small and decentralized manufacturers of fire trucks. Equipment prices rose dramatically.
Second, did the firefighters run out of water? In fact, there was water, but the pressure was too low to meet the demands from firefighters in the upper elevations of Pacific Palisades. This was not the first—and is likely not to be the last—time hydrants ran dry when called upon to combat major wildfires. The same scenario played out in Hawaii’s Maui fires in 2023 and California’s Mountain Fire in 2024. Today’s urban water infrastructure is not built for today’s climate-driven risk of wildfires—and cannot easily or cheaply be restructured to handle this new environment.
A claim closely associated with running out of water is that a major grower in the Central Valley, the Wonderful Company, owned by Stewart and Lynn Resnick, was withholding water needed to fight the southern California fires. This claim is usually coupled with assertions that the Resnicks control somewhere between 60%–80% of California’s water. While I’m no defender of the Resnicks (see “Exporting Water in the Era of Climate Cataclysm,” D&S, July/August 2022), these statements reveal ignorance of California water delivery. Yes, the Resnicks’ agribusiness operation uses a lot of water over the course of a growing season—maybe as much as 1% of total California water use. But the water is not sitting in some reservoir owned by the Resnicks. And even if such an imaginary reservoir existed, there is no way to get the water over the mountainous Tehachapi Pass. Further, there are at least two other agribusiness giants that use as much or more water than the Resnicks: the Boswell and the Vidovich agricultural empires.
In recent years the Resnicks have frequently donated to liberal causes. Is that why right-wingers have singled them out?
Right-wing commentators on the L.A. fires have promulgated the most scurrilous myth about the cause of the fires, focusing not on arson, campfires, the drought, or the winds, and certainly not on climate change. Instead, their target has been D.E.I. (diversity, equity, and inclusion programs). In this myth, it is D.E.I. that raised African-American Karen Bass to be the first female mayor (even though she won a city-wide election), and D.E.I. is implied as the basis for the selection of Kristin M. Crowley, who became the city’s first female and LGTBQ fire chief three years ago. Mayor Bass was in Ghana on January 7, when the Palisades Fire started. She left two and-a-half hours after the fire broke out, and returned to Los Angeles by January 8. Bass had suggested during her campaign that she would limit her trips away from Los Angeles, and she can, perhaps, be faulted for being away when the fires first broke out. But, so far as I have been able to find, none of Bass’s attackers have provided any examples of how her presence in Los Angeles would have made the fight against the fires different or more effective. Should she have been out there with some kind of super-hose?
What Can Be Done?
What should be done is, of course, obvious: Immediately implement policies to counter and, if possible, reverse, climate change. That won’t happen anytime soon in the United States, especially under Trump.
Billionaires often propose privatization as a solution to problems. In this case, each homeowner buys whatever fire protection they can afford, and their neighbor be damned. Los Angeles billionaire Rick Caruso, who spent $104 million in losing the mayor’s race to Bass, hired private firefighters to save his Palisades Village, a glitzy shopping mall full of luxury brand stores, such as Chanel. All the surrounding structures burned to the ground. Caruso told the New York Times, almost bragging, “Our property is standing. Everything around us is gone. It is like a war zone.”
Municipal firefighters in Los Angeles and elsewhere have complained that private firefighters often get in the way of their work. California law does not forbid these private entities from hooking up to public hydrants, although they are supposed to coordinate with public firefighters.
An ambitious plan, but one that draws upon some precedents, would be for states and cities to sue the fossil fuel industry, seeking compensation for the damage they have done and are doing. Far-fetched? The Supreme Court refused to stop Honolulu’s suit against 15 fossil fuel companies. After all, despite skepticism, tobacco companies were successfully sued for their decades-long misinformation campaign about smoking and cancer. And, after the 2018 Camp Fire that destroyed the entire California town of Paradise, insurers sued and got $11 billion from Pacific Gas and Electric for their negligence.
As noted above, the burning of over 16,000 structures put both the Palisades and Eaton Fires among the state’s worst fires. And the question of rebuilding the often very expensive Pacific Palisades dwellings, as well as the less costly homes destroyed in the Eaton Fire, places the question of home insurance in the spotlight. It is only within the last decade that insurance companies have begun to consider the reality of climate change in their risk models for premiums.
But now states across the country—Florida, North Carolina, Louisiana, Massachusetts, and others—have witnessed insurance companies leaving the state, refusing to renew existing policyholders, or sharply increasing premiums. In the past three years, homeowners in 31 states have faced double-digit premium increases. The overarching cause is weather-related disasters. Interestingly, State Farm pulled out of the Pacific Palisades in the year prior to the fire.
But the problem of home insurance still looms. Houses are particularly important in the United States, because home ownership is the most common way of building wealth, including across generations. Home ownership is also central to the “American Dream.” Escalating insurance costs will begin to cut into that wealth-building mechanism. California and 34 other states have a FAIR (Fair Access to Insurance Requirements) Plan as the insurer of last resort. In California, the coverage is capped at $3 million; thus, many of the residences in the Pacific Palisades, where the median house price is $4.2 million, would not be covered in full by FAIR. Altadena’s median house price is about $1.2 million, well under the cap. California’s FAIR Plan was created over 50 years ago. Unlike the Federal Reserve as the lender of last resort, FAIR cannot create new money. It is privately funded from licensed insurers in the state. But the number of houses covered by FAIR has more than doubled over the past four years as private insurers have dropped homeowners or hiked up the cost of their insurance. So, if FAIR is unable to cover the almost $6 billion of FAIR-insured properties in the Pacific Palisades alone, what then happens? In 2024, California adopted the approach to FAIR bankruptcy implemented in Florida and Louisiana. If FAIR’s resources are exhausted, there will be a charge on all insured homeowners in the state.
But how should the amount of such a levy be determined? Shouldn’t the owners of mansions, the Ray Carusos of the state, pay more than the African-American families burned out of their Altadena homes? And, at least as important, the fire risk is not spread evenly across all homeowners. In the 1990–2020 period, the number of new houses built in California’s fire-prone wildland-urban interface has grown 40% compared to growth of only 23% in less flammable areas. There should be a fire-prone premium, based on the assessed fire risk.
Accelerating Catastrophes
These Los Angeles fires again remind us, with renewed emphasis, that the environmental havoc being wreaked during the Anthropocene, the era during which humans have had a significant impact on our planet, is accelerating. Southern California is not alone. On the other side of the country, 2024 was the ninth successive year with above-average hurricane activity in the Atlantic, culminating in 240 deaths from Hurricane Helene. In summer 2024, Phoenix set a new record: 113 days in a row with temperatures above 100 degrees Fahrenheit. (The old record was 76 degrees Fahrenheit.) And 2024 is now the world’s hottest year on record, the first to exceed the 1.5 degrees Celsius above pre-industrial average temperatures. There will be more climate-driven catastrophes.
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