Why They Build Where They Do

Behind the chaos that so regularly characterizes natural disasters, there is often a sad cadence of predictability: Houses are destroyed, property is lost, and residents, in most cases, return home.

The fire-stricken residents of Southern California, despite their affluence or perhaps because of it, are no different. Once they go back home, they will most likely stay for good.

Firefighters work against fast-moving wildfires in the hills of Santa Clarita Valley.

Why do displaced residents and businesses continue to populate at-risk areas? The most obvious reason is that the decision is deeply personal. For Californians, there is an intuitive cost-benefit analysis that underlies their decision to live where they do; community and history, not to mention the sunshine, trump the risks of natural disasters like fires, earthquakes, and mudslides. "I was born and raised here," says Lauren Bullock, 28, an event planner who lives in Encinitas and helped her family evacuate their homes last week. "This is my home. This is what I know."

Resources vs. risk. But there are other factors, some studded with controversy. There is, for one, the economic gamble of living in a risky spot. According to a recent World Bank report, coastal regions consistently have the best access to resources—water, transportation, fishing—and thus more room for economic and population growth. Yet they also tend to be the most hazardous to inhabit. Over the past 75 years, for example, the population of Broward County in southern Florida has grown nearly 30 times faster than the national average even though it is one of the most hurricane-prone areas in the country.

Government relief efforts, made notorious by the botched Hurricane Katrina response, also contribute heavily to construction on danger-prone terrain. Private insurance companies have grown increasingly stingy since Katrina; State Farm, the country's largest private home insurer, recently announced it was dropping 50,000 policies along the Florida coast. But the federal government, at least nominally, has resisted a similar approach. As of March, it had pledged roughly $17 billion to build new affordable housing in the Gulf States region and nearly $8 billion in tax incentives to woo back businesses. Critics of the bailout contend that rebuilding in an area as vulnerable as New Orleans is fiscally irresponsible; proponents say that the alternative—a rangy ghost town—is inexcusable.

That debate is likely to continue, with one major difference: It now includes California. President Bush last week declared the Golden State a federal disaster region, and that opened up federal coffers for SoCal rebuilding.