The effects of personal experience on choice-based preferences for wildfire protection programs

Abstract

In this paper, we investigate homeowner preferences and willingness to pay for wildfire protection programs using a choice experiment with three attributes: risk, loss and cost. Preference heterogeneity among survey respondents was examined using three econometric models and risk preferences were evaluated by comparing willingness to pay for wildfire protection programs against expected monetary losses. The results showed that while nearly all respondents had risk seeking preferences, a small segment of respondents were risk neutral or risk averse. Only respondents who had personal experience with the effects of wildfire consistently made trade-offs among risk, loss and cost and these respondents were willing to pay more for wildfire protection programs than were respondents without prior experience of the effects of wildfire. The degree to which people with prior experience with the effects of wildfire can effectively articulate an economic rationale for investing in wildfire protection to other members of their own or other communities facing the threat of wildfires may influence the overall success of wildfire protection programs.

Incorporating economic valuation into fire prevention planning and management in southern European countries

“…The studies conducted by Winter & Fried (2001) and Holmes et al (2012) can serve as a good reference in this regards, as they present the respondents with scenarios closer to reality where the outcomes of a series of prevention activities are no longer precise but probabilistic.…”

“…Kahneman & Tversky (1979) argue that this type of behaviour results because people overweight a certain loss (the payment) relative to a probable loss (the gamble). The results in Holmes et al (2012) showed that while nearly all respondents had risk seeking preferences, a small segment of respondents were risk neutral or risk averse. Only respondents who had personal experience with the effects of wildfire consistently made trade-offs among risk, loss and cost and these respondents were willing to pay more for wildfire protection programs than were these respondents without prior experience of the effects of wildfire.…”

“…They found that insurance and averting activities are not substitutes but rather are purchased together to address both tangible and intangible losses. Holmes et al (2012) conducted a CM survey with three attributes (risk, loss and cost) and employed a 1,000 square lattice to illustrate the probability of a wildfire damaging the home of the surveyed individuals. The level of risk varied from 1% to 5% and the alternatives offered public and private protection.…”

Proceedings of the fifth international symposium on fire economics, planning, and policy: ecosystem services and wildfires

“…In a recent study by Holmes et al (2013) of Florida homeowners preferences and WTP for wildfire protection programs, less than 10% of survey participants were minorities (African-American and Hispanic). However, 28.9% of Florida population are from Hispanic and African-American descent (US Census, 2015).…”

“…Therefore, their results are based on a partial segment of Florida population and results might not be representative of the entire state. This study expands Holmes et al (2013) by focusing on the missing minority population. The significant increase in FL minority population from 2010 to 2015 highlights the importance of incorporating these populations when considering households WTP for evaluating fuel treatment reduction programs.…”