CoreLogic Senior Hazard Scientist Tom Jeffrey joins Yahoo Finance’s Zack Guzman to break down the latest findings in CoreLogic’s 2020 Wildfire Risk Report.
ZACK GUZMAN: Of course, the 2020 wildfire season has already been devastating to large swaths of the country. As of September 30, over 7 million acres have burned. And of course, that remains a big worry here, as populations continue to extend farther away from metro areas into areas of high risk, closer to some of those forests that have been a problem. Homes at risk, the cost to rebuild that, is being put out in a new report here from CoreLogic.
We want to dig into that with CoreLogic senior hazard scientist Tom Jeffrey, who joins us now. And Tom, I mean, the dollar figure you guys put on this is pretty shocking when you rack up all those homes in problem areas. The cost to rebuild those that you see in these risky areas, you put that figure at more than $0.5 trillion. Talk to me about how you arrived at that number.
TOM JEFFREY: Absolutely. Well, again, what we're trying to do is get the overview. So this is not a number that's going to be impacted by a single fire or a single year. But to give a general sense of where the risk is and how many homes are at threat, again, those numbers, they do tend to be pretty staggering. We're looking at more than 2 million homes. And we really are focusing on 13 states in the West. And the reason we do that is because those 13 are responsible for about 90% of the wildfire activity in a given year. So all states have some risk. But again, it's really disproportionate to the Western US.
ZACK GUZMAN: Yeah, it might not come as a surprise to a lot of our viewers out there, specifically those on the West Coast, that the top four cities you guys listed here in your risk report here are in California, being LA, Riverside, San Diego, and Sacramento. But number five surprised me-- Austin, Texas. And that's one of those centers where we are seeing a lot of tech companies move to. We know Tesla's plans in Texas. I mean, talk to me about that being one that you might not expect to be on this list.
TOM JEFFREY: I think that's one of the things that is surprising to people when they read the annual report are, you know, everybody thinks of California and rightly so. I mean, there's no question California is number one on the list. But when you start to dive in and get a deeper look at individual areas, there's a lot of Texas that's very low risk.
But certainly, in the Austin area, you have a lot of brush country. You have, you know, a lot of areas where you have very dense, very thick undergrowth. And given the climate in that area, there's potential. The Bastrop fire in 2011 was an indicator of what could happen in Texas with, you know, well over 1,000 properties destroyed.
And you know, when you go down through the list of states, California and Texas are obviously at the top, Colorado usually third. But then you get into states like Oregon, New Mexico, Arizona-- you know, states where you just don't have the coverage of the fires. They may not have as many or frequent fires or as intense of fires, but we're seeing those areas with a significant amount of risk.
ZACK GUZMAN: Yeah, and with those risks rising, I mean, when we talk about insurance costs, that becomes a pretty important factor to all this. How is that changing costs for all of these homeowners out there as we continue to see the impacts of all these wildfires-- and to your point, not just in California, but around the states that you're talking about here?
TOM JEFFREY: Well, I think the insurers-- and again, I'm not-- CoreLogic isn't an insurance company, but the data we provide is useful to those companies. How they use this data is obviously to try to determine, you know, where the risk is in relation to their book of business. So if they're going to write a lot of policies-- and every company that's in the business of insurance wants to write policies. You don't make money unless you do.
But they certainly don't want to overextend themselves in areas where that risk could wipe out a huge part of their book of business. And I think that's one of the key considerations is that all these companies are looking to write policies. They just don't want to write too many within one geographic area that could be impacted by a single event and really take a big hit from that.
ZACK GUZMAN: Yeah, I mean, and what we've seen play out, certainly this year as well as last, was just kind of the size and devastation of some of these fires. When they really do get out of control, very difficult to contain them. There was even a piece of the presidential debate last week when we heard President Trump talking about ground source here, basically tinder on the forest floor and not doing enough to manage it. There were a lot of questions when he did say that about how true that is over the last couple of years and what more can be done-- specifically, I guess, he was raising questions about California and their management of forests. Curious to know what you've seen, in terms of the trends since you guys have been publishing this report, maybe specifically on that point-- or other areas-- maybe managing this proactively rather than after we see wildfire start.
TOM JEFFREY: Well, that's a very difficult topic, and the reason is there's just so much area that you would have to maintain. So when you think of the national forests, if you want to just call it wildland in California, you know, it's-- 80% of the state is-- would be considered wildland areas. You have a lot of national forests, state forests, state land. I don't think it's feasible to think that we could go out and proactively address all of the fuel concerns in all of those areas. But I think what is important is to target specific areas where you have population encroaching on high-risk areas. Those areas definitely should be targeted, as far as management of the fuel build-up.
But I think an important secondary consideration, and one that when I speak with my colleagues and certainly others in the field, we're very concerned about the individual property-- the individual parcel owners and the communities that those parcels make up. It's very important that mitigation be done in areas where these properties are at threat. And there are things homeowners can do and communities can do to reduce the potential for that fire to encroach and burn into those developed areas. So it's kind of a two-pronged approach-- take care of the fuels that are out there in these areas that are basically nothing but vegetation, but also take care of the areas around properties, around the individual properties and communities, which makes-- the individual properties can build into a community effort to really reduce risk.