Economic Impacts of Fire

Both wildland and prescribed fires have economic implications for private, state, and federal landowners  as well as for consumers of forest products and users of forest landscapes (Moffat and Greene 2002, Mercer and others 2000).  Governments are routinely charged with protection, suppression and recovery expenses for wildfires, while the risks and insurance costs for homes and timber are borne by individuals. Prescribed fires are paid for by the landowner, who must also assume the costs of an escaped prescribed fire. Federal Wildland Fire Policy requires cost-effective fire management programs.

The ecological context of a fire location influences fuel levels, which affects fire intensity, severity, and size, and thus economic outcomes.  These economic outcomes are also influenced by the cultural, political, and social contexts of the local community and the agencies and organizations involved in the fire planning, suppression and recovery.  Although both prescribed and wildfires are referred to as ‘forest fires’, there are differences in the economic consequences, both costs and benefits, of prescribed fire versus wildland fires.  Prescribed burning is intentionally designed and managed to enhance particular resource values. The effect of wildfires on forest resources is less controllable, and thus the economic consequences are less controllable.

A variety of economic phenomena are associated with forest fires, ranging from smoke effects on accident rates to loss of endangered species habitat.  Disturbances to the ecosystem resulting from both wildfire and prescribed fire are followed by potential regeneration of resources.  The spatial and temporal complexity of both types of forest fires leads to differential effects on resources and people, and, like other natural catastrophes, can redistribute wealth within communities by transferring between different classes of consumers and producers (Holmes 1991, Prestemon and Holmes 2000).

This section will contain information on:

• incentives for wildfire risk management
• the economic consequences of prescribed fire
• the economic consequences of wildfire
• research needs