publication . Preprint . 2006

Incentives for Ex Ante wildfire risk mitigation in the wildland-urban interface: The relationship between contingent wildfire insurance and fuel management subsidies

Lankoande, Mariam D.; Yoder, Jonathan K.; Wandschneider, Philip R.;
Open Access
  • Published: 01 Jan 2006
Contingent wildfire insurance and fuel management cost-sharing programs are becoming more prevalent in western states. This paper develops a model to examine the incentive effects of these two mechanisms for private investment in wildfire risk mitigation. The model shows that contingent insurance contracts strengthen incentives for risk mitigation relative to pooled contracts and subsidies induce more risk mitigation effort by reducing margin private costs of mitigation. With pooled insurance contracts, individuals in low-risk areas subsidize the premiums of individuals living in high-risk areas, inducing too much development in high-risk areas. Subsidies can im...
free text keywords: Risk and Uncertainty,
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