The Economic Incidence of Wildfire Suppression in the United States
American Economic Journal: Applied Economics
vol. 15,
no. 1, January 2023
(pp. 442-73)
Abstract
This study measures the degree to which public expenditures on wildfire protection subsidize development in harm's way. We use administrative data on firefighting expenditures to measure the causal effect of nearby homes on the amount spent to extinguish wildfires. We use these estimates in an actuarial calculation yielding geographically differentiated expected implicit subsidies for homes across the western United States. The expected net present value of this subsidy can exceed 20 percent of home value, increases with fire hazard, and decreases surprisingly steeply with development density. We discuss potential behavioral responses by individuals and local governments using a simple economic model.Citation
Baylis, Patrick, and Judson Boomhower. 2023. "The Economic Incidence of Wildfire Suppression in the United States." American Economic Journal: Applied Economics, 15 (1): 442-73. DOI: 10.1257/app.20200662Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- Q23 Renewable Resources and Conservation: Forestry
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- R52 Regional Government Analysis: Land Use and Other Regulations
- R58 Regional Development Planning and Policy
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