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Risk externalities and the problem of wildfire risk

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  • Shafran, Aric P.
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    Abstract

    Homeowners living in the wildland-urban interface must decide whether or not to create a defensible space around their house in order to mitigate the risk of a wildfire destroying their home. Risk externalities complicate this decision; the risk that one homeowner faces depends on the risk mitigation decisions of neighboring homeowners. This paper models the problem as a game played between neighbors in a wildland-urban interface. The model explains why sub-optimal investment in defensible space is likely and provides insights into the likely effectiveness of programs designed to encourage households to increase their defensible space. Data from Boulder County, Colorado confirm that a household's defensible space decision depends on the defensible space outcomes at neighboring sites.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Urban Economics.

    Volume (Year): 64 (2008)
    Issue (Month): 2 (September)
    Pages: 488-495

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    Handle: RePEc:eee:juecon:v:64:y:2008:i:2:p:488-495

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    Web page: http://www.elsevier.com/locate/inca/622905

    Related research

    Keywords: Wildland-urban interface Wildfire Externalities Risk mitigation Spatial interactions;

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    Cited by:
    1. Tyler Prante & Joseph M. Little & Michael L. Jones & Michael McKee & Robert P. Berrens, 2010. "Inducing Private Wildfire Risk Mitigation: Experimental Investigation of Measures on Adjacent Public Lands," Working Papers, Department of Economics, Appalachian State University 10-10, Department of Economics, Appalachian State University.
    2. Gregory DeCoster & William Strange, 2012. "Developers, Herding, and Overbuilding," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 44(1), pages 7-35, January.
    3. Busby, Gwenlyn & Amacher, Gregory S. & Haight, Robert G., 2013. "The social costs of homeowner decisions in fire-prone communities: Information, insurance, and amenities," Ecological Economics, Elsevier, Elsevier, vol. 92(C), pages 104-113.
    4. Thomas J. Cova & Philip E. Dennison & Frank A. Drews, 2011. "Modeling Evacuate versus Shelter-in-Place Decisions in Wildfires," Sustainability, MDPI, Open Access Journal, vol. 3(10), pages 1662-1687, September.
    5. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers, Resources For the Future dp-12-28, Resources For the Future.
    6. Kimberly Rollins & Mimako Kobayashi, 2010. "Embedding a Field Experiment in Contingent Valuation to Measure Context-Dependent Risk Preferences: Does Prospect Theory Explain Individual Responses for Wildfire Risk?," Working Papers, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics 10-003, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.

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