Burned out: How privatised risk is failing victims of climate disasters

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For example, some state laws in the US require disclosing a home’s flood history or wildfire risks to potential buyers or making insurance policies conditional on homeowners taking specific risk reduction measures, such as raising a home’s mechanical systems above the base flood elevation, creating five-foot ember-resistant zones around homes or clearing fire-fueling vegetation from around a house.

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But privatising climate risks may backfire as people may resent bearing the costs of the collective failure to address the climate crisis. And privatising these risks spells trouble for public entities.

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First, privatising climate risk may make it difficult for a large majority of Americans to gain or retain home ownership. Some analysts suggest that one in ten properties insured by the US’s National Flood Insurance Program will eventually require a rate hike of at least 300 per cent. Flood insurance in the worst-affected areas in Florida and Louisiana could increase so dramatically for some properties that they “effectively become worthless“.

Second, privatising responses to climate risks — either through policy or the uncoordinated actions of individuals and households — may also affect public responses to climate-related disasters. In the wake of the LA fires, the wealthiest households hired concierge firefighting services to protect their properties while the rapidly moving wildfires scorched entire neighborhoods around them.

Third, privatising risk is unlikely to address the systemic effects of the climate crisis. For example, one of the most important and often neglected, questions is the role that property taxes play in the provision of services by local governments.

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