There are two competing narratives about the causes of the tremendous destruction of buildings and lives that the recent Southern California fires have wreaked. One group of people blames the destruction on climate change. Another group blames it on bad government policy that has nothing to do with climate.
Which side is more correct? The second side. Even if we take as given the idea that climate change has caused fires to be more destructive, governments at all three levels—federal, state, and local—have implemented policies that caused the Southern California fires to be much more destructive than they would have been. Moreover, there is little evidence that climate change was a major cause of the fires.
Let’s say you that you believe that climate change, a.k.a. global warming, has made fires more extreme. If you think that, doesn’t it follow that you should prepare for such fires? It’s not as if we’re totally helpless. So, let’s consider the various claims about human causes. When I was earning my PhD in economics at UCLA, many professors’ favorite way of posing a question on an exam was to make a statement and ask us to say whether it was true, false, or uncertain. That’s how I’ll evaluate the main claims.
Mayor Karen Bass’s absence
Many people blame Los Angeles Mayor Karen Bass for leaving for Africa even though she knew that strong Santa Ana winds were coming. I don’t. The reason is that after her return, her input when she announced—I kid you not—that the victims of the fires should contact “URL” was not useful. It wouldn’t have mattered much whether she had traveled or not. Therefore, I count as false the claim that her absence made the fire situation worse.
The water system
One big problem with fighting the fires in Pacific Palisades is that the fire hydrants ran dry because so much water was being used. Why did this happen? It’s not clear.
Michael Shellenberger argued that one reason was that the Los Angeles Department of Water and Power, a government agency, had drained the Santa Ynez Reservoir. According to a news report in the Wall Street Journal, the reservoir, which has a capacity of 117 million gallons of water, was shut down so that the LADWP could conduct repairs. The Journal report stated that the reservoir “has been offline and empty since early 2024 pending repairs to a floating cover meant to keep its water free of contaminants.” Shellenberger’s claim seems plausible. If he’s right, then we can blame the Department of Water and Power for emptying the reservoir. Why was it empty? According to the Wall Street Journal news report, the cover that needed fixing “was installed in 2011 to comply with federal water-quality regulations.” What were those regulations? Would people really have been at great risk if the cover had not been installed? We’ve had reservoirs for over a century that were not covered. Has that caused a lot of problems? If the answer is that people were not at great risk, then we can lay this one at the feet of the federal government’s water-quality regulations.
On the other hand, the empty reservoir might not have been the culprit. That same Wall Street Journal report, which appears to have been carefully done, argued that the binding constraint was the rundown of the various tanks that held water. And a January 10 editorial by the Journal argued that the problem was not the empty reservoir but, rather, the sixty-year-old system of pipes for delivering water.
I conclude, therefore, that the claim about the empty Santa Ynez Reservoir being a major cause is uncertain.
But here is what’s true. Governments tend to neglect long-term improvements in infrastructure. Why? Incentives. Government managers of government assets have little incentive to preserve and improve them. If they do it well, they capture none of the value they create. If they do it badly, they lose almost nothing. At worst, they get fired, and that’s not even a given. Think of how often we hear about government bureaucracies failing spectacularly, with the bureaucrats in charge holding on to their jobs while taking no pay cuts. Even worse, sometimes legislatures react to bureaucratic failures by giving the bureaucracies more power and bigger budgets. Private owners, by contrast, have a strong incentive to preserve and improve assets.
We know that socialism for the whole economy doesn’t work. The central planners have neither the incentives nor the information to plan an economy well. That was the major insight in Friedrich Hayek’s classic 1945 article “The Use of Knowledge in Society.” Socialism for parts of the economy—remember that socialism means simply “government ownership of the means of production”—works not much better. The bottom line is that we can blame government ownership—remember that the Department of Water and Power is a government agency—for the worn-out infrastructure. So, I count as true the claim that the Department of Water and Power was at least somewhat at fault.
Fire department cuts and personnel
We heard a lot in the first few days of the fires about how Mayor Bass and the city council had made cuts to the Los Angeles Fire Department. Reporter Emily Crane, in the New York Post, stated in a January 8 news story that Bass had cut the fire department’s budget by $17.6 million.
It turns out that that’s not true, as Los Angeles Times reporter David Zahniser pointed out in January 10 news story. Zahniser writes:
The City Council approved the firefighter raises in November, adding more than $53 million in additional salary costs. By then, the council had also signed off on $58 million for new firetrucks and other department purchases.
The bottom line, according to Zahniser:
Once those two line items were added, the fire department’s operating budget actually grew by more than 7 percent compared to the prior fiscal year, according to the city’s financial analysts.
On the other hand, one source says that the fire department budget fell from $837.2 million in 2024 to $819.6 million in 2025. That does amount to a $17.6 million drop. It appears from that source that the claim is true. Moreover, that 2.1 percent drop, when adjusted for an inflation rate of 2.3 percent, is a substantial 4.4 percent. Because the sources disagree, I count the $17.6 million budget cut claim as uncertain.
There is one more important fact to add about the Los Angeles Department. In 2019, someone in the fire department thought it was a good idea to do a promotional video in which Deputy Chief Kristine Larson claimed that when there is an emergency, the people helped feel more comfortable when the helper looks like them. I can honestly say that I don’t care at all about whether the person rescuing me looks like me. I’m not a racist, and it’s wrong to promote racism, as Larson did. It gets worse. The well-paid Larson went on to address the issue of whether a female firefighter could rescue someone’s husband. One would hope that her answer would have been yes. But that hope would be in vain. Larson’s response: “He got himself in the wrong place if I have to carry him out of a fire.” Alrighty then.
We don’t know how much this blasé attitude to saving people’s lives mattered for how the fire department responded. But it can’t have helped.
Trimming back brush
An obvious way to make fires less destructive is to have less fuel around for them to burn. But the federal government has imposed massive barriers to doing that.
When governments fail to carry out prophylactic burns on government land, they make a given fire potentially much more destructive. According to the Property and Environment Research Center (PERC), under the National Environmental Policy Act, it takes the US Forest Service on average of 4.7 years from the initiation to the carrying out of a prescribed burn. If opponents of the burns litigate them, it takes an average of 7.2 years. A lot can go wrong while people wait.
The belief that failure to make prescribed burns leads to catastrophe is one shared even by some people on the left side of the political spectrum. A 2020 article by Elizabeth Weil in ProPublica, not exactly a libertarian or conservative site, stated:
Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres.
The article is titled, “They Know How to Prevent Megafires. Why Won’t Anybody Listen?”
Weil also wrote:
We live with a deathly backlog. In February 2020, Nature Sustainability published this terrifying conclusion: California would need to burn 20 million acres—an area about the size of Maine—to restabilize in terms of fire.
The Eaton fire, which destroyed much of Altadena, is less than eight miles, as the crow flies, from the Forest Service’s Angeles National Forest.
I count as true the claim that government regulation held up clearing of brush and trees.
One hopeful note. On January 23, the House of Representatives, in a bipartisan vote, passed the Fix Our Forests Act. The act would clear out some of the bureaucratic underbrush (pun intended) that makes it difficult to manage forests. Here is the PERC testimony on the bill in 2024.
Did climate change play a role?
One major cause of the destructive fires in the Los Angeles area is that Southern California is in the midst of a major drought. Since July 2024, the Los Angeles area has had less than one inch of rain.
An important question, therefore, is whether the drought is due to climate change. Climate scientist Patrick T. Brown argues that there is little evidence that climate change is responsible for this drought. The two previous years were very wet. Did the climate change that much in a year? Brown also rebuts the idea that a climate “whiplash”—very wet years followed by a very dry year—is likely to have worsened these fires; he detects no unusual pattern of that nature in recent decades.
Moreover, if we are to consider the impact of climate change, we need to look at all the impacts. Brown cites a 2019 article from Geophysical Research Letters that reported the results of eight global climate models (GCMs). The authors’ abstract stated this about the Santa Ana winds whose intensity fanned the Los Angeles fires:
All GCMs project decreases in SAW [Santa Ana Wind] activity, starting in the early twenty-first century, which are commensurate with decreases in the southwestward pressure gradient force that drives these winds.
I judge the role of climate change, therefore, to be false.
Regulations and the road to recovery
Now that the fires have destroyed more than 12,000 structures, many people, quite naturally, want to rebuild. The problem is that they live in regulated California.
Two main types of regulation get in the way. One is fire insurance. The California insurance commissioner, Ricardo Lara, has power over insurance premiums. He purposely set rates in high-risk areas below the rates that would be dictated by the risk. As a result, many insurers refused to issue or renew policies and many people in those areas could not get fire insurance, a result of price controls that almost any economist can tell you to expect. Unless insurance premiums are deregulated, many people will be nervous about rebuilding.
That brings me to the second type of regulation: restrictions on building, including heavy-handed permit processes.
On January 12, California Governor Gavin Newsom, to his credit, signed Executive Order N-4-25, which suspends regulations under the California Environmental Quality Act (CEQA) and the California Coastal Act that would otherwise be barriers to new construction in the fire-emergency zones. Unfortunately, that same executive order imposes another indirect barrier: it ratifies parts of the penal code that prohibit “price gouging in times of emergency.” “Price gouging” is another term for increasing prices to levels that the government thinks are unjustified. But it is precisely higher prices that would bring in needed labor and materials from outside the area. The result of this price control will be slower rebuilding.
Even if CEQA and the California Coastal Commission are held at bay, the standard building permit process can slow things down. Here’s a scary headline from a January 22 Reason article on Hawaii’s experience after its devastating fire in 2023: “18 Months After Wildfires Destroyed Some 2,000 Homes on Maui, Only 3 Have Been Rebuilt.”
Relatedly, on January 14, Newsom signed Executive Order N-7-25, which bans people from making unsolicited offers to buy properties in the fire-affected areas for under their “fair market value” as of January 6, which was, of course, the day before the fires started. Violators could be fined or even imprisoned. This would essentially ban all unsolicited offers. Who wants to pay as much for a property with no house as he would have paid for the same property when there was a house? Why would Newsom want to reduce demand for assets that people might want to sell? Is he simply cruel? No. He’s just thoughtless. Newsom claims that fire victims “may be traumatized, uncertain, and especially vulnerable to exploitative practices of unscrupulous individuals who seek to profit from this disaster.” Some probably are traumatized and vulnerable. But others would probably like to receive such offers and don’t have time to put out feelers when they’re dealing with such a tragic situation. Who is Gavin Newsom to decide?
Where did he get this idea? He may have got it from his conversation about “speculators” with Hawaii Governor Josh Green. He reported on the conversation in this video (at the 1:47 point).
Conclusion
The extent of destruction from the Southern California wildfires is due, in part, to government ownership of water distribution and government’s failure to take care of tinderbox forests. That’s not the end of it. In highly regulated California, I predict, local governments will continue to put roadblocks in the way of rebuilding.
