🔥Building a Fire-Resilient Future: From Policy to Practice [Part 1/2]
A two-part series on addressing the wildfire crisis.
Without even having to say it, you’ve already seen it in the news: there are wildfires everywhere.
Just this year, there’s been a wildfire emergency in Russia. And in Brazil's Pantanal, across the world’s largest tropical wetland. And don’t forget about the fires in the Sichuan province of China, too.
Compared to just over 20 years ago in 2001, wildfires have destroyed 3 more million hectares of tree cover every year - a number that is only set to worsen as researchers estimate that the occurrence of extreme fires globally may increase by 50% by the end of this century.
But wildfires do more than just scorch vital habitats, homes, and essential infrastructure. The toxic particles they emit cause premature deaths (California alone reports 50,000 excess deaths and $423B in health expenses between 2008 and 2018 due to wildfire smoke), they pollute the water catchments we depend on, and they release stored terrestrial carbon into the atmosphere, exacerbating climate change.
In the first of this two-part series on wildfire resilience, we’ll be presenting a primer of why wildfires have become as bad as they are, as well as what governments and liable corporations are trying to do about the problem.
In part two, we’ll cover the types of interventions and investment opportunities that can work to prevent, predict, detect, and respond to wildfires.
Why has the risk of catastrophic wildfires become so significant?
Wildfires are obviously the result of a complex interaction of biological and abiotic factors, but social factors have played huge roles in changing the extent, longevity, behaviour, and severity of each wildfire event.
Besides the more obvious factor of climate change, there are two primary human-related drivers of wildfires: deforestation, and the suppression of natural fire cycles.
In the tropics, deforestation affects the water cycle and creates more of the dry conditions that are conducive for wildfires to spark and get out of control. Peatland drainage, performed to prepare the land for agriculture or forestry, also contributes to this same issue.
In fire-adapted landscapes like in California, having a full fire suppression policy (such as the that of the USFS in the 1910s) has led to an overabundance of vegetative fuel. Without the small “fire breaks” created by small, controlled fires, that fuel provides a path for wildfires to spread much more rapidly and catastrophically.
How is the threat of wildfire geographically distributed?
Historically speaking, 70% of all fire-related losses over the last 20 years have occurred in boreal regions, especially due to the fact that the higher latitudes are warming more quickly than the rest of the planet. For example, in 2001, Russia saw 5.4M ha of fire-related losses, and more recently in 2023, Canada lost 9.5M ha from their catastrophic fires.
As we look ahead into the future, the probability of wildfire is increasing in all regions, but the greatest growth in costs and number of affected assets is expected in North America and Eastern Asia. In the US, costs related to wildfires have already risen astronomically, from $8.5B in 2012-2016 to $80B between 2018-2021.
Who’s liable? The lawsuits holding corporates accountable for irresponsible behaviour
As a result of the massive wildfires that we’ve seen in recent years, there have been a number of multimillion dollar lawsuits filed against corporates and governments, in the range of $30M, all the way up to a whopping $13.5 billion (that last number was for PG&E in California, if you were wondering).
While industries like transportation have been hit too (such as when the Durango & Silverton Narrow Gauge Railroad company paid a $20M settlement in a lawsuit linked to 2018 wildfire damages), its the utilities & power industry that is particularly prone to lawsuits regarding wildfire risk, especially in drier landscapes.
In some cases, they’ve been accused of negligence in maintaining their equipment, such as power lines and transformers. When faulty equipment sparks a wildfire, the utility company may be held liable for damages.
Utility companies can also be held accountable if they fail to take measures to reduce the risk of wildfires (e.g. shutting off power when wildfire risk is high).
For example: In the wake of the Maui Fires of 2023, Hawaii Electric was accused of failing to have predetermined strategy for shutting off power when wildfire risks were high. That meant that power lines stayed energized during high-danger conditions - the cause of the wildfires, according to critics. The county’s lawsuit against Hawaii Electric also alleged that the utility “knew that their electrical infrastructure was inadequate, aging, and/or vulnerable to foreseeable and known weather conditions”.
But of course, utility companies must also manage potential power shut-offs to prevent wildfires with the need to provide quality services to their customers, putting them in a difficult and delicate position.
In the tropics, such as in Southeast Asia, it’s palm oil and pulp and paper companies that face pressure in the form of fines when forest fires burn, although these are less frequent and comparatively inexpensive. In 2019, 3 companies in these industries were linked to forest fires, and although they could have been fined up to S$2M each (at a rate of S$100K a day) by the Singapore government for unhealthy haze levels, they were not financially penalized. More recently, an Indonesian oil palm company was fined $61M for fires on their plantation.
The funding landscape for wildfire resilience
So, how do the combination of these different factors translate into public and private sector budgets for wildfire resilience?
North America leads the way when it comes to funding for the prevention of wildfires. In 2022, the USFS launched a 10 year strategy to address the wildfire crisis, which aimed to preventatively treat up to 50 million acres of land. They have funded more than $1 billion of proposals in disadvantaged communities as part of this strategy, and in 2024, an addition $490 million was channelled to their efforts from the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA). In Canada, over $800M has been invested since 2019 for initiatives that support wildland fire response, prevention, and mitigation.
Australia has also directed significant funding for wildfire prevention. After the catastrophic fires that hit Australia in 2020, the government established the National Bushfire Recovery Agency with a AU$2B fund. Besides activities in restoring fire-scarred landscapes, this fund also went to agricultural producer grants, mental health services, tourism, and more. Of this fund, AU$100M has been allocated to promoting development of resilient technology against these fires, such as the $3M investment into a free Bushfire Resilience Rating Home Self-Assessment app.
While the EU has also allocated a budget for wildfires, it has been comparatively modest, and mostly allocated with response measures: approximately 90% of the EU budget for wildfires wildfires is dedicated to combatting forest fires, with only 10% for developing preventative measures for fires, including €170M on a fleet of fire-fighting aircrafts, and €100 million for 60 research projects on forest fires across two decades.
Unsurprisingly, the majority of the private funding going to wildfire resilience is coming from the sectors that are most likely to cause fires and are therefore at greatest risk of being fined or sued; PG&E, which we mentioned previously in relation to fires in California, has pledged $18B to address wildfire risks in its grid by 2025, and in South East Asia, forestry companies and non-profits formed the voluntary Fire-Free Alliance.
Screenshot above taken from the Fire-Free Alliance Website
Active member April reports it has spend over $7M on fire equipment, with $2M in annual operating costs for fire teams on the ground.
Beyond the corporates, there are a small number of investors who are also looking specifically to fund projects and innovations for improving the world’s fire resilience, including VC firm Convective Capital, and the California Wildfire Innovation Fund managed by Blue Forest.
Although we at Silverstrand aren’t fire-focussed investors, we see the spread of wildfires directly related to the biodiversity crisis, alongside other nature and climate-tech investors.
Hopefully, you’re still with us at this point and have enjoyed this fact-filled investigation. Stay tuned for part two, where we’ll take a deeper look at some of the approaches and supporting technologies that are being invested in & deployed to address the wildfire crisis.