Yet more wildfires

More than half of the global economy depends on the good health of the natural world.

Images of forest fires raging out of control and threatening communities have been a recurring feature of the news stories over the past few years. So too in 2020. At the start of the year, before COVID-19 monopolised the airwaves, the 2019/2020 bushfire season in Australia was still burning. The longest fire season ever, in what was also the country's hottest and driest summer on record, burned more land area and houses than ever before. Insurers faced claims of USD 1.6 billion, the highest ever generated in one year by wildfire peril in Australia. 

Then, starting from mid-August and following a record-breaking heatwave in western US, more than 800 wildfires burned close to 6 million acres in California, Oregon and Washington State. The area scorched was about three times the annual average of the previous 10 years. At least 17 fires (a record) encroached on densely populated areas, destroying thousands of structures and triggering billions in insured claims. 

Although ultimately short of the record losses of 2018 and 2017, this year will go down as one of the costliest for this hazard. Wildfires have become significant contributors to industry losses, with fire claims growing to tens of billions of dollars annually in recent years, of which more than 70% came in the last five years alone.

Figure 1 illustrates the dramatic increase in global insured claims due to wildfire events since 1980. From below USD 10 billion in the period 2000-2009, total claims rose to USD 45 billion in the subsequent decade.

Global insured losses from wildfires since 1980 by decade (USD billion), at 2020 prices

An ever-present hazard

Wildfires are a natural phenomenon of the forest ecosystem, essential for restoring nutrients to the soil, clearing out decay, and helping plants to reproduce. Every day a fire burns somewhere in the world. Fires regularly ignite and burn forestland after lightning strikes, with weather conditions governing their occurrence and spread. As such, wildfires are an-ever present hazard in forest and grassland areas. Most fires do not threaten communities, but some do destroy vast expanses of timber resources. An example were the major forest fires in Siberia in the hot and dry summer of 2010. They mostly did not directly threaten urban communities, but did wipe out billions worth of timber assets. Occasionally forest fires do spread to urban areas where they can threaten human safety and property, and become very costly for insurers, as was the case in 2017, 2018 and again in 2020. 

Parts of Europe have also seen severe fire outbreaks in the past few years. For example, in 2017 conditions of extreme drought led to severe fire outbreaks in an extended fire season in Portugal.1  The fires that burned in October alone led to insured losses of USD 0.3 billion, the most ever in Portugal from any natural disaster event. 

Wildfires are complex events, and their aftermath is not confined to the rebuilding of communities and regrowth of vegetation. Occasionally the impact can change conditions to allow for other forms of destruction. For instance, in January 2018 a cloudburst triggered a mudslide from mountains laid bare by the Thomas Fire in Montecito, California the previous December. Post-fire erosion increases the likelihood of rain washing away charred vegetation into rivers, causing flooding downstream. 

Burning: a new norm?

Many factors have contributed to the increased frequency of massive, destructive and deadly conflagrations. A major factor is an increase in natural fuels (dry biomass) and conditions conducive to wildfires, a result of prolonged periods of low rainfall. In December 2017, the USDA Forest Service estimated that the total number of dead trees in California due to drought and bark beetles was 129 million across 8.9 million acres.2  In western US, the combination of higher spring and summer temperatures and reduced rainfall in fire seasons increase the risk of fire ignition.

Human-induced climate change is fuelling increased wildfire risk, particularly in western US where the average annual forest fire area burned doubled beyond that expected from natural climate variability alone during the period 1984–2015.3 The number of homes burned by wildfire in this region has tripled over the past decades.4  In California, the annual area burned has increased fivefold since the early 1970s.5  The annual area burned is expected to increase further in the western US.  6

Some reasons behind the increase in the number of large fires have nothing to do with climate change. For example, some say the history of fire suppression in the US and the world has exacerbated wildfire risk, as fewer fuels have been allowed to burn, meaning that more flammable biomass has accumulated over time. 

Mitigation is key

Wildfire risk is included in standard homeowner insurance policies. However, while
scientists have a good understanding of the environmental conditions conducive to burning, modelling wildfire risk is challenging given the unpredictable role that humans play in both initiating and suppressing fires. Furthermore, the spread and ease of fire containment are very much influenced by the ambient environmental conditions including wind, temperature and humidity, also unpredictable.7 Irrespective of such
challenges in pricing the risk, the very large and growing scale of wildfire losses highlights the importance of increasing resilience through planning, building practices and exposure reduction.

References

 1Relatório Provisório de Incêndios Florestais – 2017, Instituto da Conservação de natureza e das Florestas, 3 October 2017, http://www2.icnf.pt/portal/florestas/dfci/Resource/doc/rel/2017/10-rel-prov-1jan-31out-2017.pdf
 2USDA Forest Service, 12 December 2017, https://www.fs.usda.gov/Internet/FSE_DOCUMENTS/fseprd566303.pdf
3J. T. Abatzoglou and A.P. Williams, “Impact of anthropogenic climate change on wildfire across western US forests”, Proceedings of the National Academy of Sciences, vol 113, no 42, 2016.
 4T. Schoennagel et al., “Adapt to more wildfire in western North American forests as climate changes”, Proceedings of the National Academy of Sciences, vol 114, no 18, 2017.
 5A.P. Williams et al., “Observed impacts of anthropogenic climate change on wildfire in California”, Earth's Future, 2019.
 6T. Kitzberger, et al., “Direct and indirect climate controls predict heterogeneous early-mid 21st century wildfire burned area across western and boreal North America”, PloS one, vol 12, 2017.

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