Destroyed homes, soaring insurance premiums and forest management costs put the price of the Los Angeles fires in the hundreds of billions of dollars. But these staggering figures mask a darker ledger where costs compound silently over decades as climate change fuels more intense and recurrent blazes.
As the ashes settle, the region faces an invisible threat beneath the charred remains: compromised soil structures, contaminated watersheds and ecosystems stripped of their natural defenses — wounds that will bleed for years to come.
The numbers tell a story of brutal transformation: Over the past eight years, California’s wildfires have burned about three-quarters of the area they did over the previous three decades. This is undermining California’s natural infrastructure, which has long supported its prosperity, in ways that conventional metrics fail to capture. The most troubling data isn’t in the headlines.
Tracking the surge in firefighting costs and insured losses misses the decay of natural systems that provide water filtration, soil retention and carbon capture. These crucial natural functions remain absent from our balance sheets — until they start to fail.
Sustained droughts deepen the crisis. California now faces 78 more “fire days” per year — periods ripe for wildfire ignition — than it did 50 years ago, ushering in what scholar Stephen Pyne calls the Pyrocene, the age of the year-round fire season. In Pacific Palisades, even homeowners who followed every fire prevention guideline found themselves forced to evacuate in January, a month that historically has not been part of the fire season.
Today’s fires also burn hotter and deeper, altering landscapes in ways that unravel centuries of ecological development. When fires burn through a forested hillside, the immediate loss of trees is just the beginning. Carbon capture capacity declines dramatically as forests are replaced by chaparral, undermining efforts to mitigate climate change.
When the flames are intense enough to destroy root systems, they also change the soil structure. Ground that once absorbed and filtered water becomes water-repellent. Rain that once soaked into aquifers now races across the surface, increasing the risk of flash floods and carrying toxins from burned structures into water systems that serve millions. Water treatment plants face rising costs from contaminated runoff, and downstream agricultural lands struggle with sediment-laden irrigation water.
The long-term economic and environmental consequences are enormous. When the 2020 California fires released more than 100 million metric tons of carbon dioxide, they didn’t just offset the state’s progress in reducing emissions progress; they turned the state from a carbon sink into a carbon source. After the Camp fire leveled the town of Paradise in 2018, water officials found benzene and other carcinogens in the municipal water supply, necessitating an estimated $300 million in repairs. The areas burned since 2017 represent billions in lost ecosystem value, and any possible recovery operates on nature’s timeline, not ours.
Wildfire management has become a collective action problem akin to vaccination or flood control, in which individuals’ good choices can’t guarantee collective safety. A single untended property threatens entire communities, just as poorly managed federal forests overwhelm state resources.
California has tens of millions of dead trees to serve as kindling for the next mega-fire, yet no single entity has sufficient authority or resources to address the threat. The U.S. Forest Service manages much of California’s land, the state bears most of the firefighting burden, and private property owners face some of the greatest consequences.
When homeowners invest in fire-resistant materials and protect more than their own property by helping to preserve hillside stability, watershed quality and regional air quality, the broader benefits aren’t fully captured in insurance premiums and property values. And the costs multiply when development continues in high-risk areas, with a third of California homes located in or near dense vegetation. Insurance companies withdraw from high-risk areas even if homes meet fire safety codes, property values become disconnected from environmental risks, and rebuilding efforts repeat past mistakes.
A single fire can release particulate pollution that is thousands of times more damaging than greenhouse gases, contaminate water supplies with heavy metals from burned structures and make future fires more likely by altering landscapes, revealing the misalignment between personal choices and community interests.
That’s why we need an integrated approach. Natural systems don’t respect administrative boundaries, and neither should our solutions. Breaking the cycle of escalating fire damage requires fundamentally restructuring economic incentives to reflect the true value of natural infrastructure.
California stands at a crossroads. We can keep treating wildfires as isolated disasters, measuring their cost in acres and properties burned, or we can work together to collectively value and preserve our natural defenses. As California’s climate continues to warm, the question is no longer whether we can afford to make these changes but rather whether we can afford not to.
Augusto Gonzalez-Bonorino is an economics instructor at Pomona College.
