Wildfires in Poland: the impact of risk preferences and loss aversion on environmental choices

This paper examines how risk preferences and loss aversion affect choices over a risky environmental good, wildfire prevention in Poland. We collect data in a stated preference survey that allows us to calculate both risk aversion and loss aversion parameters from individual respondents in both the financial and environmental domains. In doing so, we are able to confirm that this behaviour is consistent with prospect theory and holds for the majority of respondents. Additionally, we find little evidence of domain specificity of risk: responses to the financial risk questions were good predictors of responses to the environmental risk questions.