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From Catastrophe to Caution: The Effect of Wildfires on Community Hazard Mitigation Investments

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  • Sølvsten, Simon
  • Whitlock, Zachary

    (Resources for the Future)

  • Liao, Yanjun (Penny)

    (Resources for the Future)

Abstract

This paper examines the impact of wildfires on community-level hazard mitigation efforts, specifically focusing on participation in the Firewise USA program. Using a panel dataset of ZIP Code Tabulation Areas in the western United States from 2002 to 2019, we find that wildfires significantly increase participation. However, the response is notably weaker in areas with higher shares of minority populations, suggesting that these communities face greater barriers to engaging in risk reduction efforts. The paper also explores the role of homeowners’ insurance, finding that Firewise participation can mitigate increases in insurance premiums after a wildfire, although it does not significantly affect the availability of coverage. The findings highlight the need for targeted support and coordination to enhance resilience in vulnerable communities.

Suggested Citation

  • Sølvsten, Simon & Whitlock, Zachary & Liao, Yanjun (Penny), 2024. "From Catastrophe to Caution: The Effect of Wildfires on Community Hazard Mitigation Investments," RFF Working Paper Series 24-25, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-24-25
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    File URL: https://www.rff.org/documents/4733/WP-24-25_48iERec.pdf
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    References listed on IDEAS

    as
    1. Geoffrey H. Donovan & Patricia A. Champ & David T. Butry, 2007. "Wildfire Risk and Housing Prices: A Case Study from Colorado Springs," Land Economics, University of Wisconsin Press, vol. 83(2), pages 217-233.
    2. Travis Warziniack & Patricia Champ & James Meldrum & Hannah Brenkert-Smith & Christopher M. Barth & Lilia C. Falk, 2019. "Responding to Risky Neighbors: Testing for Spatial Spillover Effects for Defensible Space in a Fire-Prone WUI Community," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1023-1047, August.
    3. Hazra, Devika & Gallagher, Patricia, 2022. "Role of insurance in wildfire risk mitigation," Economic Modelling, Elsevier, vol. 108(C).
    4. McCoy, Shawn J. & Walsh, Randall P., 2018. "Wildfire risk, salience & housing demand," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 203-228.
    5. Shafran, Aric P., 2008. "Risk externalities and the problem of wildfire risk," Journal of Urban Economics, Elsevier, vol. 64(2), pages 488-495, September.
    6. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    7. Judson Boomhower & Meredith Fowlie & Jacob Gellman & Andrew Plantinga, 2024. "How Are Insurance Markets Adapting to Climate Change? Risk Classification and Pricing in the Market for Homeowners Insurance," NBER Working Papers 32625, National Bureau of Economic Research, Inc.
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