Reforming California’s Electrical Grid to Decrease Impacts of Wildfires: A Cost- Benefit Analysis

This report contains a cost-benefit analysis regarding the mitigation of California’s wildfires ignited by electricity infrastructure. Due to climate change, the magnitude of California’s wildfires has increased; while not all wildfires are caused by power lines, a sizable number of California’s most destructive wildfires have been started by power lines.

The authors analyze three policies in comparison to a business-as-usual scenario, which assumes no fire mitigation strategies are implemented:

  1. The Public Safety Power Shutoff (PSPS) program deenergizes power lines in high-risk areas
  2. Undergrounding power lines decreases the risk of debris contact with electrical material
  3. Using microgrids decreases the number of people impacted by deenergizing the grid

The authors found that the PSPS had the highest net benefits, followed by microgrids and undergrounding. When excluding the non-monetized costs and benefits to society, the continued implementation of this recommendation represents a net benefit to society of $2.07 to $6.73 billion over the next 30 years. The authors’ analysis of the PSPS resulted in the highest positive net benefits for this analysis for a 3.5% and 5% discount rates and under low, medium, and high-risk fire year scenarios. The authors found 100% of the 10,000 Monte Carlo simulation trials for this policy had positive net benefits, which was higher than any other policy alternative.

The report recommends the state of California continue to implement PSPS events, while the federal government makes investments in research involving microgrid and undergrounding methods to further reduce the costs of long-term wildfire prevention policies.


  • Course: Cost-Benefit Analysis Public Affairs 881 taught by Morgan Edwards, Fall 2021
  • Authors: Hayley Barwick, Muhammed Fofana, Kelsey Gordon, and Adam Kanter
  • Client: Dan Molzahn, Argonne National Laboratory

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