Economic incentives for reducing wildfire risk: Taking stock of an emerging field

Increased intensity and frequency of extreme wildfires impose significant societal costs worldwide, affecting not only landowners' properties but also society at large. Private landowner efforts to self-mitigate wildfire risks may become insufficient, as many benefits accrue as positive externalities to society, thus not entering sufficiently into private cost-benefit calculations. Economic incentives may potentially constitute one way to bridge this gap, by strengthening individual, hierarchy, and community rationalities, based on the Cultural Theory. Here, we review both the scientific and grey literature to establish a dataset of economic incentive mechanisms for increasing wildfire risk-reducing actions. We analyse 80 case studies, report their design, any known outcomes and impacts, and classify them according to our theory. Our findings reveal that, while multiple incentive tools indeed exist, publicly financed subsidies and payments for environmental services (PES) are most prominent. We zoom in on the economic assumptions of two selected subsidy and PES-like programmes, featuring similar benefits yet variable cost scenarios over time. On the other hand, private-sector insurance, wildfire bonds, and product-labelling incentive mechanisms, or liability-related disincentives, all remain nascent in their real-world application. We emphasise the importance of spatially targeted action in high-risk areas and highlight that rigorous impact evaluation of incentive mechanisms remains limited. Scaling-out strategies-replicating initiatives at a similar scale-appear overall more encouraging than scaling-up actions beyond the firescaping. Continued experimentation with well-targeted and cost-effective incentives for wildfire risk mitigation thus remains a promising pathway for pursuing the sought-for wildfire paradigm shift.