Public and Private Wildfire Risk
Management:
g
Spatial and Strategic Interaction
Gwen Busby, H.J. Albers, Claire Montgomery
May 8, 2007
Background
• Increase in the frequency and severity of wildfire
in the western US
Year
Suppression Cost
(billions)
Acres Burned
Homes burned
2002
$1.66
6,937,584
4,184
2003
$1.32
4,918,088
4,508
2004
$ 89
$.89
6 790 692
6,790,692
315
2005
$.87
8,686,153
402
2006
----
9,873,745
750
Source: National Interagency Coordination Center at the National Interagency Fire Center
• Increase in the number of individuals living in the
wildland urban interface (WUI)
Fuel Treatments
• Spatial externalities
• Free riding
• Strategic behavior
Game Theory and Strategic Behavior
G
Game
consists
i t of:
f
1.
Players
2.
Strategies
3
3.
Payoffs
Probability
Values
Survive Fire
Fuel treatment effort
The Landscape
WUI
Outside WUI
Public and Private
Ownership
Only Public
Ownership
Public
Public
Private
Private
Choice
eg,w
ep
Choice
eg,o
---
Amenity
A
it
Value
Ag,w
Ap
Amenity
Value
Ag,o
---
Property
Value
φv
(1 − φ )v
Property
Value
---
---
Public’s
Problem
Private’s
Problem
Social
Planner’s
Problem
max {( A
g ,w
+ φv)π (eg , w + e p ) + Ag ,oπ (eg ,o )}
e g ,w ,e g ,o
s.t.
c (e g , w + e g , o ) = B
max {( A
p
+ (1 − φ )v)π (eg , w + e p ) − e p c}
ep
max { A
π (eg ,o ) + ( Ag , w + v + Ap )π (eg , w + e p )
g ,o
e g ,w ,e g ,o ,e p
− c(eg , w + eg ,o + e p )}
How does each player respond to
what the other is doing?
Private’s
Private
s Response Function
Public’s
Public
s Response Function
Private
effort
(ep)
Private
effort
(ep)
kink
y-intercept
x-intercept
i t
t
ki k
kink
Public effort (eg,w)
Public effort (eg,w)
Extreme Free Riding
g Equilibria
q
Public’s Response Function
Private
effort
(ep)
Private’s Response Function
Private
effort
(ep)
Public effort (eg,w)
Public effort (eg,w)
Shared Effort Equilibrium
Public’s Response Function
Private’s Response Function
Private
effort
(ep)
Public effort (eg,w)
45
Fuel Rd
duction Effo
ort (e)
40
35
30
25
20
15
10
5
0
0
1
2
3
4
5
P bli ' Budget
Public's
B d t (B)
Public Effort Outside WUI
Public Effort in the WUI
Private Effort in the WUI
Socially Optimal Effort in the WUI
Socially Optimal Effort Outside the WUI
Total Effort in the WUI
Equilibrium effort levels for: Ag,o =1; Ag,w=1; Ap=1; φ=0.5; v=2; c=0.1.
6
45
40
Fuel Red
duction Effort (e
e)
35
30
25
20
15
10
5
0
0
1
2
3
4
5
6
7
Public's Budget (B)
Public Effort Outside WUI
Public Effort in WUI
Private Effort in WUI
Socially Optimal Effort In and Outside the WUI
Total Effort in the WUI
Equilibrium effort levels for: Ag,o =4; Ag,w=1; Ap=1; φ=0.8; v=2; c=0.1.
8
45
40
Fuel Red
duction Effortt (e)
35
30
25
20
15
10
5
0
0
02
0.2
04
0.4
06
0.6
08
0.8
1
Public's Fraction of Liability
Public Effort Outside the WUI
Public Effort in the WUI
Private Effort in the WUI
Socially Optimal Effort in the WUI
Socially Optimal Effort Outside the WUI
Total Effort in the WUI
Equilibrium effort levels for: Ag,o =1; Ag,w=1; Ap=1; B=2; v=2; c=0.1.
12
1.2
Policy Implications
• WUI requirements should be removed from the
H lth F
Healthy
Forestt R
Restoration
t ti A
Actt
• Reduce public liability
• Increase the valuation of undervalued
(or un-priced) amenities outside the WUI
• Increasing public’s budget will not necessarily
lead to increases in fuel reduction effort outside
the WUI nor increases in total effort in the WUI
Main Points
• Increasing public spending on fuel
treatments in the WUI decreases private
land owners’
owners incentives for fuel treatments
treatments.
• Given public budget constraints the more
funds that are spent in the WUI, the less
money that is available outside the WUI.
Objectives of Future Research
1 S
1.
Spatially explicit landscape with public
and private ownership.
2. Government regulation,
g
, liability
y rules,, and
private insurance
3. Best policies for typical ownership
patterns