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The United States has experienced an even longer and more intense wildfire season than normal in recent years, largely resulting from drought conditions and a buildup of flammable vegetation. The derived stochastic dynamic model in this study was utilized to evaluate the interaction of wildfire risk mitigation policies for two adjacent landowners under various scenarios of forest benefits while accounting for full awareness of fire externalities. This study also evaluated the effectiveness of cost-share programs and fuel stock regulation and investigated under which scenarios of forest management interests the implementation of these policies encourages risk mitigation behaviors and yields larger reductions in social costs. The findings revealed that social costs significantly reduced after the implementation of cost-share programs and fuel stock regulation. Market-oriented adjacent landowners were more responsive to policy instruments compared to other types of neighboring landowners, and their responsiveness was greater for fuel stock regulation policies than for cost-share programs. Policymakers may introduce extra financial incentives or more rigorous fuel stock regulations to induce nonmarket-oriented landowners to undertake increased fuel management activities.

The Impact of Heterogeneous Management Interests in Reducing Social Losses from Wildfire Externalities