The Economic Impacts of Wildfires on Agricultural Land Markets

Wildfires have become more prevalent and have negatively affected economic well-being and human health in wildfire-prone regions. Compared to other sectors, the effects of wildfires on agriculture have received less attention. In this paper, we estimate the effect of wildfires on agricultural land prices. To the extent that wildfires pose a threat to current and future farm-related returns, agricultural land prices should decrease in response to nearby wildfires. We employ a difference-in-differences research design to examine how wildfire risk, measured by proximity to wildfire, affects observed parcel-level agricultural land prices. The study uses pooled cross-sectional data covering agricultural land transactions in Oregon over the period 2000-2023. Preliminary results indicate that wildfire risk has lowered agricultural land values in Oregon by 19-54% for parcels in close proximity (within 2km) to wildfires. The findings highlight the importance of measuring the economic costs of recent catastrophic wildfires in Oregon and the western US, particularly in relation to wildfire-related damages to the agricultural sector.