Evaluating Incentive-Driven Policies to Reduce Social Losses Associated with Wildfire Risk Misinformation

Wildfires have caused significant ecological and social losses in terms of forest benefits, private dwellings, and suppression costs. Although great efforts have been made in wildfire policies and wildfire-mitigating strategies on private and public lands, devastating wildfires continue to occur. This implies there is a need for effective incentive-driven policies to encourage forest owners to undertake an increasing level of wildfire-mitigating actions. This study evaluates the effectiveness of alternative incentive-driven policies for the problem of two adjacent forest owners under various scenarios of misinformation about wildfire occurrence and spread using a stochastic dynamic model. The study also investigates how the implementation of these policies encourages wildfire-mitigating actions, yields larger reductions in social losses, and alleviates free-riding behavior. The outcomes of the analysis confirm that the effectiveness of incentive programs in reducing social losses and increasing forest value is influenced by the level of misinformation held by a forest owner when making wildfire prevention decisions. The results also revealed that fuel stock regulation is more effective at mitigating wildfire damages and associated costs than cost-share programs under all misinformation scenarios. It was also found that fuel stock regulation could correct free-riding behavior due to the restrictive nature of this policy. The findings provide additional motivation for educational programs that seek to improve forest owners’ knowledge about the private benefits of fuel removal and collaboration efforts between neighboring forest owners. Collaborative efforts could yield substantial savings for the government through eliminating cost-share programs and reducing suppression costs.