Risk Thinking for the California Wildfires (Part 1)

Author: Ron Dembo

Throughout California in the United States, wildfires frequently devastate large swaths of forest and encroach on residential areas, forcing evacuations and even costing lives. Most of the time, lightning causes the fires to start, striking foliage dried out by severe heatwaves that are the result of Climate Change.

But on occasion, one of the power lines from Pacific Gas and Electric (PG&E), the state’s largest utility provider, will brush up against improperly managed vegetation and spark a fire, destroying private property and causing significant environmental damage for which the company is liable.

An Unhedged Bet

California law requires the company to ensure a minimum of 10ft between flammable vegetation and high-voltage lines. But the company frequently flaunts this regulation, choosing instead to divert funds ($77 million between 1987 and 1994) from its trimming program into shareholder profits.

In 1994 PG&E’s power lines caused a devastating blaze in Sierra that burned down 12 homes and a schoolhouse, and the company was convicted of 739 counts of criminal negligence for failing to trim vegetation. Then it happened again in 1996 and 1999. On that last occasion, it cost the company $15 million in damages.

Why do the company do this? We might cautiously speculate that it is because the liability for the fires usually ends up cheaper than actually undertaking the management of the vegetation (or better, routing the power underground). It’s all part of a gamble, and it’s a gamble that relies on expert judgement about the way that fires spread.

The Cost of Losing

At the end of October 2017, Tubbs Fire broke out in the rural northern part of Calistoga in Napa County, California. With humidity low and winds speeds climbing from 30mph to 41mph and ever higher, the blaze spread quickly, bursting out of control before fire crews even had a chance to respond.

With wind speeds now hitting hurricane levels of up to 93mph, and the fire racing towards the city of Santa Rosa, its only impediment was Highway 101 between Fulton and Roseland. If it managed to cross the tarmac somehow, it would burst unimpeded into the urban development of the city.

Never before has a fire jumped Highway 101’s 12 lanes near Santa Rosa in Northern California. If we were to take PG&E employees who had been working in the region all their lives as our experts and ask them whether a fire could do that, they would probably all say, “No way, we’ve never seen that happen”.

And they’d be right.

But if we were to venture further afield to Ventura County in the South, through which Highway 101 also runs, and asked local firefighters there the same question, we would get a different response. They had battled the deadly Thomas Fire of December 5, 2017, which was fanned by dry Santa Ana winds that clocked over 60mph. They had seen with their own eyes the inferno whip up and over the highway and lay its devastation on the other side.

Getting A Diversity of Expert Opinion Is Essential

If we were running risk management for PG&E, it might not initially have been obvious to collect our expert judgement from sources outside Northern California — or even outside of the PG&E employee pool. But by doing so, we expand our forward-looking data to include the more extreme possibilities. And we might have been able to forewarn them of would happen in 2017, when smoke was seen whistling across the highway with the flames at its heels.

As it was, the fire leapt up and over the highway, devastating the Coffey Park neighborhood and razing 1,300 structures to the ground. Two medical centers in Santa Rosa were evacuated, and as the inferno blew through the city it took with it a senior living complex, a primary school, a winery, a health campus and several other institutional buildings before moving on to Larkfield-Wikiup where it destroyed another 500 homes.

By the time it had finally been contained, a full 23 days after it began, Tubbs fire had burned 36,807 acres, destroyed 4,651 residential structures, 94 commercial properties, and damaged hundreds more. The fire incurred $100 million in fire suppression costs, and Santa Rosa’s economic loss was estimated at $1.2 billion (2017 USD). Worse, it claimed the lives of 22 civilians.

A Chance to Do Better

PG&E’s gamble had been misinformed, and the consequences tragic. Expanding the pool of expert judgement might have provided more appropriate data with which to hedge or bet on the fire’s progress. At the very least, the incident should have been a stark warning to PG&E to make significant changes. Sadly, as the next blog explores , it was ignored.



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