The Interaction of Wildfire risk mitigation policies in the presence of spatial externalities and heterogeneous landowners

The dramatic increase in the number of uncontrollable wildfires in the United States has become an important policy issue as they threaten valuable forests and human property. The derived stochastic dynamic model of this study is capable of determining optimal fuel treatment timing and level simultaneously and as a function of fire risk and fuel biomass dynamics. This study develops a stochastic dynamic model to evaluate the interaction of fuel treatment decisions for two adjacent landowners under various scenarios of misinformation about fire occurrence and spread. Findings indicate that a landowner tends to free ride on fuel treatment undertaken by his adjacent landowner. However, the study finds that the free riding potential of a landowner could be alleviated to some extent by having a neighboring landowner who is aware of fire spillover effects. In addition, the study reveals that the social cost resultant from free riding behavior is lower that the social cost associated with complete absence of fire externality awareness for both landowners. These findings imply that governments could introduce more effective educational programs to ensure that all landowners are fully aware of cross-parcel benefits of fuel treatment in order to align socially and privately optimal decisions, thus minimizing externality costs.