Wildfire Futures and Moral Hazard

The 2026 wildfire season has been marked by devastating consequences for communities across the West Coast, with climate change bearing a significant portion of the blame. Prediction markets have emerged as another concerning factor, allowing users to bet on various events, including wildfires.

Polymarket, a platform that facilitates betting on various events, has seen over $1 million in bets placed on major fires in California last year alone. A new market, Wyldfyre, specifically focused on betting on wildfires, has also launched. This raises serious questions about the potential for manipulation and moral hazard. Legislators like Sen. Jeff Merkley (D-OR) have sounded the alarm, pointing out that unlike most natural disasters, fires can be easily started or spread by humans.

This creates a real risk that people could attempt to manipulate markets, potentially leading to more destructive and deadly fires. The consequences of such actions would not only harm communities but also undermine trust in emergency services. By providing opportunities for people to profit from wildfires, we’re effectively creating an incentive structure that encourages reckless behavior.

The issue extends beyond the markets themselves. It speaks to a larger problem: our society’s willingness to profit from tragedy. We’ve seen it with disaster tourism, where people flock to areas affected by wildfires or hurricanes to gawk at the destruction. Now, we’re seeing it with prediction markets, where individuals can bet on the very fires that are burning communities down.

This trend raises important questions about our values as a society. Do we prioritize profit over public safety? Are we willing to sacrifice community well-being for the sake of financial gain? The answer seems clear: we must find better ways to manage risk and encourage responsible behavior, rather than exploiting tragedy for personal benefit.

The consequences of inaction will be severe. More lives will be lost, communities will suffer further devastation, and trust in our emergency services will continue to erode. Policymakers must take a hard look at these prediction markets and regulate them accordingly. We owe it to ourselves, our children, and the communities affected by these wildfires to act with caution and integrity.

The 2026 wildfire season is already one of the worst on record. Let’s not make matters worse by turning tragedy into profit.