Liability, Regulation, and Endogenous Risk: The Incidence and Severity of Escaped Prescribed Fires in the United States

Prescribed fire is a useful but risky method for reducing the general wildfire risk and improving wildlife habitats, biodiversity, timber growth, and agricultural forage. In the past 15 years, laws to further promote the use of prescribed fire have been adopted in several states. This article examines the effect of liability laws and common regulations on the incidence and severity of escaped prescribed fires in the United States from 1970 to 2002. Regression results show that stringent statutory liability laws and regulations tend to reduce the number and severity of escaped prescribed fires on private land but not on federal land, where state liability laws do not directly apply. An economic motivation—based on the explicit recognition in these statutes of the perceived public benefits provided by prescribed fires—for the recent changes in statutory laws is provided.