Who Pays for the Next Wildfire?
California’s Crisis Raises a Bigger Question: What Is Government’s Role?
In California, wildfire season no longer follows the calendar. It’s year-round, intensifying, and increasingly expensive. But the financial toll of these disasters is now colliding with something more fundamental than budgets or insurance markets: a crisis of purpose. What is the role of government when disasters driven by climate change become both inevitable and uninsurable?
Governor Gavin Newsom’s proposal to add $18 billion to the California Wildfire Fund is a bold attempt to stabilize the state’s utility sector and restore confidence after a deadly start to 2025. The Eaton and Palisades fires killed 30 people and destroyed over 16,000 structures in January.
Southern California Edison is facing multiple lawsuits, and the financial risk from these fires alone could exceed $130 billion in total economic damage.
Newsom’s plan would double the wildfire fund’s assets and extend its lifespan to 2045. The money would come equally from utility customers and from the three major investor-owned utilities that benefit from the fund: PG&E (PCG-NYSE), Sempra (SRE-NYSE), and Edison (EIX-NYSE). The proposal also aims to limit insurance subrogation claims (payments insurers seek from utilities after paying out damages to fire victims) arguing that speculative hedge funds have exploited this mechanism at the public’s expense.
While the urgency is undeniable, this plan is largely reactive. The Wildfire Fund only comes into play after more than a billion dollars in damages. It’s a financial bandage — not a fire prevention strategy.
California’s Wildfire Fund raises bigger questions
What is the role of government in assisting constituents when a disaster happens? How aggressively do we want our government to be in funding prevention before a crisis? Is wildfire proactive planning and a reactive response in an era where Americans want a low overhead, streamlined (ie. DOGE or Project 2025 inspired) government programs?
At the federal level, FEMA was known for disaster relief, and USDA’s USFS was known for funding community wildfire mitigation programs. Now both have seen funding decreased to reduce overhead, with the expectation that state programs, such as the California Wildfire Fund, will help people within each state. The $18B proposed additional funding, sponsored by Governor Newsom, will help Californians harmed fires earlier this year and in the future.
Programs like utility vegetation management, home hardening (supported by loans and grants in some Firewise communities), and local zoning reforms all reduce fire exposure. These efforts reflect a growing recognition that real savings — both financial and human — come before the first spark.
As UC Berkeley fire scientist Michael Gollner puts it,
“Almost everything you can do to avoid the worst outcomes must take place long before the first spark.”
But prevention rarely makes headlines, and it rarely satisfies the political pressure to act after a tragedy.
Meanwhile, a quiet campaign is unfolding across western states that could reshape the legal responsibilities for wildfire damages. Led by Berkshire Hathaway (BRK.A, BRK.B-NYSE), a reinsurance company whose utility subsidiary, PacifiCorp, faces billions in claims for past fires, a coordinated legislative push has emerged to limit utility liability throughout the western states. These bills were pushed hard and fast, and caught timber companies, insurers, and consumer groups off guard.
In Utah, lawmakers passed a bill capping utility wildfire liability and creating a publicly funded wildfire pool, similar to California’s Wildfire Fund, but with a different funding mechanism. Similar legislation is advancing elsewhere.
Critics warn that this shift in legal risk, from utilities to the public, could backfire. If utilities aren’t fully accountable when their equipment causes a fire, then smaller insurers, local governments, and homeowners will be left with the bill.
Utilities, municipalities and government agencies all have a role to play here, and sharing the insights and planning are key. Athena, of course, believes that mitigation, based on an accurate assessment of future wildfire risk, will make the investment in hardware and vegetation management a productive as possible.
Everyone knows that insurers have been scaling back coverage in wildfire zones, retreating from entire regions they now deem too risky. In some areas, premiums exceed what families and businesses can afford. In others, insurance is simply unavailable. At that point, real estate transactions become difficult as mortgages, loans, and long-term investments all become more difficult or impossible. In a worst case scenario, fire risk areas could become regions where the full price of a house must be paid to acquire it, as currently is true in many third-world countries.
If utilities, municipalities and government agencies don’t work together and share their wildfire risk reduction with insurers and other parts of the financial system, the entire economic system could crack. Allianz SE, one of the world’s largest insurers, recently warned that the climate crisis is on track to destroy the foundations of capitalism. Entire regions — coastal, arid, and fire-prone — could see their economic value erased as they become uninsurable and unfinanceable. In the words of Allianz board member Günther Thallinger,
“This is what a climate-driven market failure looks like.”
Wildfires, unlike hurricanes or earthquakes, are largely preventable
Humans have the tools and the data to understand where fires are likely to ignite, how they spread, and what infrastructure or land-use practices elevate the risk. Data from satellite imagery, terrain analysis, weather patterns, and infrastructure networks can now predict fire risk with startling accuracy.
This is where companies like Athena Intelligence are stepping in. By integrating geospatial data, wildfire behavior science, and infrastructure analytics, Athena can help utilities and communities identify where the next fires are most likely to start — months in advance. That insight can drive proactive investment in vegetation management, smarter infrastructure maintenance, better insurance underwriting, and more effective local planning.
Yet instead of investing in this type of data-driven risk reduction, the federal government is walking away while some investor-owned utilities are pushing for legal immunity. These utilities are lobbying for laws that limit their liability without a corresponding commitment to reduce the underlying risk. Like General Reinsurance’s parent, they argue: shareholder risk must be managed, even if public risk grows.
At the same time, many insurance carriers have been slow to adopt wildfire-specific risk modeling. The lack of shared, accurate data, and the absence of transparent, independent oversight, has created a fragmented system where no one is truly responsible for prevention, and individuals and families are vulnerable after the fact.
This moment calls for a broader rethinking of government’s role in climate resilience
Rather than acting as the insurer of last resort, government at every level must become the risk mitigator of first resort. That means grants and the legal structures for financing infrastructure upgrades, enforcing risk-informed land-use rules, and requiring utilities to prove their fire prevention plans are grounded in real science and data.
Newsom’s proposal to expand the Wildfire Fund is a necessary step, but it is not a solution. It is a financial stopgap for a system in urgent need of reform. The real path forward lies in using the data we already have to build a smarter, safer, and more equitable system that prevents wildfires before they start.
There’s still time to choose that future. But it will require political courage, public investment, and a clear understanding of the stakes. Wildfires don’t have to bankrupt utilities. But ignoring the data will.
Athena Intelligence provides geospatial profiling tools that translate vast, disaggregated wildfire and environmental data into actionable spatial intelligence — creating a digital fingerprint of wildfire risk.
If wildfire risk is on your mind, don’t stop here — explore some of our other articles. If your community is served by a municipally owned or cooperative electric utility, let them know about Athena Intelligence. We’ve published here, and on Energy Central, information on how our data helps utilities make smarter, faster wildfire mitigation decisions.
If you live in a homeowners association, wildfire risk isn’t just a personal concern — it’s a shared financial one. Whether you’re worried about your own home insurance or the community’s property coverage, we have tools that can help you lower risk, strengthen your insurance position, and safeguard property values.
We also equip community disaster managers with the intelligence they need to anticipate, plan for, and respond to wildfire threats.
Reaching every utility, HOA, and emergency manager ourselves would be like trying to “boil the ocean.” But you can help change that. You can be the person who asks your community leaders, utility managers, or HOA board to demand better data.
Better data drives better decisions. Better decisions build resilience. And resilience starts with someone willing to speak up.
Athena Intelligence has clients in financial services, insurance, utilities, communities and homeowners’ associations (HOAs). Athena’s geospatial intelligence is incorporated into multiple products that can be accessed through an online portal. Athena’s data is currently used in wildfire mitigation plans (WMP) and public safety power shutoffs (PSPS), Community Wildfire Protection Plans (CWPP), property insurance underwriting and portfolio risk optimization.
Reach out to me at Elizabeth@AthenaIntel.io and follow us here, on LinkedIn or Energy Central.
