Strategic Behavior and the Environment > Vol 8 > Issue 1

Mitigating Wildfire Risk on Private Property with Spatial Dependencies

Michael H. Taylor, Department of Economics & Cooperative Extension, University of Nevada, USA, taylor@unr.edu
 
Suggested Citation
Michael H. Taylor (2019), "Mitigating Wildfire Risk on Private Property with Spatial Dependencies", Strategic Behavior and the Environment: Vol. 8: No. 1, pp 1-31. http://dx.doi.org/10.1561/102.00000091

Publication Date: 24 May 2019
© 2019 M. H. Taylor
 
Subjects
Public Economics: Public Goods,  Economic Theory: Microeconomic Theory,  Economic Theory: Mathematical Economics,  Environmental Economics,  Environmental Economics: Market-based Policy Instruments,  Collective action,  Forestry
 
Keywords
JEL Codes: D80Q54R20
Defensible spacerisk externalitiesnatural disasterswildfirepolicyeconomics
 

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In this article:
Introduction 
Model Development 
Externalities and Homeowner’s Defensible Space Investment 
Community Equilibrium 
Policy Analysis 
Extensions: Home Value, Mortgage, and Insurance 
Conclusions 
References 

Abstract

This article develops a theoretical model to analyze the impact of policies to promote defensible space — the most prominent wildfire risk mitigation strategy on private property — on the overall level of defensible space in a community when homeowners’ investment decisions are spatially dependent. The model describes how spatial dependencies can arise as a result of three externalities associated with defensible space: risk externalities, visual seclusion externalities, and externalities related to the interdependence of post-fire home values. The results suggest that the impact of policy on the equilibrium level of defensible space in a community will depend on the character of the spatial dependencies between neighboring homeowners’ investments, as well as on the pre-policy equilibrium. The results also emphasize the importance of financial considerations in homeowners’ defensible space investment decision.

DOI:10.1561/102.00000091