Capitalization of Environmental Amenities and Wildfire in Private Home Values of the Wildland Urban Interface of Northwest Montana, USA.

Over the last decade, the United States Department of Agriculture Forest Service (Forest Service) has been increasingly tasked with protecting wildland urban interface (WUI) neighborhoods from wildfire. In addition to fire suppression duties, the Forest Service has attempted to mitigate the wildfire risk posed to the WUI through prescribed burning and other types of fuels reduction projects. But rising suppression costs and diminishing social acceptability of fuel management treatments are putting pressure on the Forest Service to economically justify its wildfire and fuel management decisions.Economic models employed by the Forest Service to support decisions about the allocation of wildfire suppression resources in the WUI have traditionally only accommodated residential structure and timber values. However, society derives many non-market benefits from publicly managed WUI areas, including recreation and aesthetically pleasing vistas, which are affected by wildfire management. The objective of this study was to assess the effects of wildfire on social welfare in northwest Montana. This was achieved by fitting a hedonic price model to house sales data from the study area to estimate how environmental amenities and wildfire affect willingness to pay for homes.It was found that living within zero to five and five to ten kilometers of where a wildfire had occurred, reduced property values by 20.2% and 5.2% respectively. This translates into a $47,580 and $13,260 reduction in the sale price of a home given a mean value of $260,000. Additionally, being able to see a burned area reduced sale prices by 3.1%. This was around an $8,060 reduction. Canopy cover is another integral component of amenity value to homebuyers wherein adding an additional hectare which is in medium canopy cover within 250 meters of the home increased property values by $3,640. However, adding an additional hectare of medium canopy cover between 250m and 500m around a home decreases property value by $1,040. By deriving shadow prices for non-market resources and wildfire effects on natural amenity values and perceived wildfire risk, this study can assist fire managers to allocate fire management resources in a more socially efficient manner, particularly in the WUI.