Environmental economics and bushfires

Summer in Australia is about beach, cricket, BBQ, tennis and … bushfires! Indeed, the beginning of 2013 has been marked with series of very serious bushfires, destroying a lot of property, but thankfully not taking many lives.
And this is far from the end: the summer is long and hot!
What do economics in general, and environmental economics in particular have to say about bushfires? A quick search of the literature shows that there is limited published work on this general topic, with notable exception of the more specifically focused papers on e.g. economics of prescribed burning (e.g. a recent nice work by colleagues from WA)
The notion of environmental economics in relation to bushfires is even more limited to fires as a cause of air pollution, and to economic valuation studies that look into fires (and smoke) as reducing the values of property or reduction in benefits that hikers, bikers and campers suffer as a result.
I could not find anything that looks into bushfires as environmental event in their own right: naturally occurring fires have always existed and have an important role to play in the overall ecosystem. So, preventing and avoiding bushfires certainly saves on cost of damage (to property, human life and health, and recreational benefits), but does it impose costs in addition to the usual costs of abatement (i.e. costs of prevention: like prescribed burning)? What are the damages to the ecosystem (perhaps altered populations of pests and weeds, changed hydrological balance, etc.) that is associated with bushfire prevention?
These are some of the questions that await to be answered. And until we answer them, we will not have a good sense about how much bushfire prevention should be done. We have ventured so deep in the environment, that we now think that everything that the nature does, which annoys us, should be prevented. One of the first lessons learnt in environmental economics is that zero pollution is almost never optimal or desired by society. Does the same hold for bushfires?

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.