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A99.9 F7625u

United States
Department of
Agriculture

Forest Service

Pacific Northwest
Research Station

Research Note
PNW-RN-542
October 2004

USDA
rise |

Issues in Evaluating the
Costs and Benefits of

Fuel Treatments to Reduce
Wildfire in the Nation’s Forests

Jeffrey D. Kline’

Abstract

Wildland fire has been perhaps the most vexing forest management and policy =>
issue in the United States in recent years, stirring both passionate and reasoned
debate among managers, policymakers, researchers, and citizens alike. Years of fire
suppression and increasing constraints on natural and prescribed burning, possibly
along with climate change, have altered historical wildfire regimes resulting in
increased wildfire severity in the Nation’s forests. The growing wildfire threat has
motivated increasing interest in reducing hazardous fuels through prescribed
burning, thinning, and harvesting. Debate about whether such fuel treatments are
necessary persists owing in part to the complexity of the wildfire issue and to
general disagreement among managers, policymakers, researchers, and citizens
about whether long-term wildfire impacts and current trends present a real problem.
Although scientific research continues to resolve many aspects of the wildfire issue,
comprehensive economic analyses examining the wisdom of investing in fuel
treatments to reduce wildfire threat are lacking. This report presents one way of
conceptualizing the costs and benefits of fuel treatments and wildfire and briefly
reviews issues related to their evaluation. The intent is to enrich ongoing debate by
organizing management and policy dialogue around a conceptual framework that
characterizes the long-term impacts of fuel treatments on forest conditions and
wildfires, within an analytical context that includes both wildfire- and nonwildfire-
related forest management activities.

Keywords: Fuel treatments, wildfire, wildland/urban interface, cost-benefit

analysis.

’ Teffrey D. Kline is a research forester, Forestry Sciences Laboratory,
3200 SW Jefferson Way, Corvallis, OR 97331.

RESEARCH NOTE PNW-RN-542

Introduction

By investing in fuel treatments, forest managers attempt to purchase an incremental
reduction in the likelihood of extreme fire behavior. Fire research has shown that
physical setting, fuel, and weather combine to influence wildfire intensity—the rate
at which fires consume fuel—and severity— the effects fire has on vegetation, soil,
buildings, watersheds, and other resource values (Russell and others 2004). Fuel
treatments are implemented to help produce forest structures and fuel characteris-
tics that reduce the likelihood that wildfires will cause large and rapid changes in
biophysical conditions, and modify fire behavior sufficiently to make fire suppres-
sion easier (Russell and others 2004). Although not guaranteed, the expectation
is that fuel treatments over the long term will result in lower fire suppression and
postfire restoration costs, less smoke, less wildfire-related property damage, and
fewer lost socioeconomic and ecological forest benefits. Evaluating the changes in
net benefits that we can expect from fuel treatments involves estimating the effects
of treatments on reducing the likelihood of extreme wildfire events by reducing
wildfire intensity, severity, and scale, as well as the effects that treatments and wild-
fires have on forest management costs and the variety of forest benefits.

The USDA Forest Service and other researchers have been examining parts
of the fuel treatment issue for some time. To date, however, little comprehensive
analysis exists addressing whether fuel treatments are a worthwhile investment.
One reason for this has been a general lack of sufficient information describing
fuel treatment and wildfire effects on the full range of timber and nontimber forest
outputs and landscape processes, as well as their relative values to society. Also,
perhaps lacking until the few big fire years of the past 10 years, has been sufficient
political interest in funding comprehensive analyses evaluating fuel treatments.
More generally, misunderstanding exists among many managers, policymakers,
and researchers about the larger role that economics can play in evaluating forest
management issues such as fuel treatments, beyond merely accounting for market-
based timber values and jobs. This report is intended to meet increasing manage-
rial, political, and scientific interest in fuel treatments, by describing conceptual
and scientific issues relevant to evaluating whether fuel treatments are a worthwhile
investment from an economic perspective. The report is intended as an economic
primer for managers, policymakers, and noneconomist researchers who find them-
selves engaged in decisionmaking and research regarding fuel treatment and related
wildfire issues.

Fire severity has a large influence on the composition and structure of plant
communities that follow fire. Although landscapes subject to low-intensity fires
generally experience the return of prefire flora relatively quickly, landscapes subject

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

to large, severe fires often recover slowly (Brown 2000: 186-187). Years of wildfire
suppression and increasing constraints on natural and prescribed burning, among
other factors, have altered historical wildfire regimes—their patterns, sizes, unifor-
mity, and severity (Brown 2000, Parsons 2000). These changes, possibly along with
climate change (for example, Whitlock and others 2003), have resulted in increased
wildfire severity, which in turn has motivated interest among forest managers and
policymakers in recent years to reduce forest fuel loads to lessen the wildfire threat.
That fire historically has been an important agent of landscape change and now
should be restored to its natural role in the Nation’s forests generally is not disputed.
What is debated is the manner and extent to which managers should intervene in
natural processes by reducing fuel loads to lessen severity of wildfires.

For much of the 20" century, wildland fire suppression was a major compo-
nent of federal forest policy. Since the late 1960s and early 1970s, recognition of

the natural role of fire in ecosystem processes as well as mounting fire suppression Although fuel treat-
expenditures gradually led to an easing of the fire suppression mandate, refocus- ments undoubtedly
ing forest policy to consider fire by prescription, subordinate to broader landscape can be used to alter
objectives (Pyne 1997). Restoring fire to ecosystems after decades of fire sup- forest structure
pression poses many challenges owing to long-term changes in the structure and and change wildfire
composition of plant communities, as well as increased presence of people, homes, behavior, to date

and other structures near forests (Hourdequin 2001, Parsons 2000). Any restora- there has been little
tion path we choose for a given landscape defines a particular ecological trajectory scientific evidence
characterized by a flow of goods and services accruing from the natural capital demonstrating whether
inherent in healthy ecosystems (Science and Policy Working Group 2002, 2004). fuel treatments make
Ecosystem restoration decisions ultimately are economic decisions whereby soci- economic sense.

ety evaluates the utility of different management alternatives, including inaction
(Weigand and Haynes 1996). Embarking on one particular management and policy
alternative necessarily carries costs associated with other opportunities that are
foregone. Although fuel treatments undoubtedly can be used to alter forest struc-
ture and modify wildfire behavior and severity (Graham and others 2004), to date
there has been little scientific evidence demonstrating whether fuel treatments make
economic sense.

The fuel treatment issue raises several questions, with potential answers to be
found in different types of analyses. Both wildfires and the fuel treatments intended
to reduce them, can result in costs and benefits over time. These costs and benefits
could be examined by using cost-benefit analysis if sufficient data were available
to do so. Also of interest are local and regional economic impacts associated with
changes in economic activity and employment resulting from fuel treatments and

wildfires. In addition to these scientific questions are philosophical questions

RESEARCH NOTE PNW-RN-542

arising from ambiguity, if not general disagreement, regarding society’s objectives
and self-defined role in forest management. Public debate about the wisdom of fuel
treatments often becomes clouded by the indeterminate nature of questions at hand,
as well as the imperfect state of scientific information describing the impacts of fuel
treatments and wildfires on socioeconomic and ecological benefits provided by
forests. This report presents one way of conceptualizing the costs and benefits of
fuel treatments and wildfire, and their long-term impacts on forest conditions. The
intent is to enrich ongoing debate by organizing dialogue around a conceptual
framework that includes wildfire suppression and postfire restoration. This largely
economic discussion of fuel treatments, however, admittedly exists within a broader
management and policy debate that at times centers as much on noneconomic

issues.

Benefits and Costs of Wildfires and Related Forest
Management Actions

Fuel treatments are just one of three general types of management actions conduct-
ed on forest landscapes directly to address wildfire. Other management actions are
wildfire suppression (including initial response, extended attack, and large fire sup-
port) and postfire restoration (including emergency stabilization and rehabilitation).
By investing in fuel treatments in a location, we must recognize that we are mak-
ing implicit tradeoffs between the benefits and costs of those particular treatments
and the benefits and costs of other potential investments, such as other treatments,
postfire restoration, or greater fire suppression in other locations. All management
actions that we conduct today have the potential to affect future forest conditions
and wildfire regimes, as well as our range of management choices in future years.
The effects of wildfires and fire management decisions over time can be il-
lustrated by using a simple conceptual framework (fig. 1). Current forest conditions,
such as fuel loads, their proximity to valued resources or structures, and topogra-
phy, largely determine the types of fuel treatments deemed necessary in a particular
location in a given year. The combination of forest conditions and fuel treatments
determines the wildfire regime—the intensity, severity, and scale of wildfires—
that occur on the forest landscape, and the likelihood of extreme wildfire events
requiring significant suppression effort. How the wildfire regime affects the forest
landscape—the patterns, sizes, and severity of burns—depends partly on wildfire
suppression actions taken during wildfire events, which are formed in response
to the characteristics of individual wildfires that occur. The lasting impacts of the
wildfire regime are further modified by postfire restoration actions, resulting in the

particular forest conditions managers face the following year (fig. 1). Management

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

Postfire Fire Fuel M
restoration © suppression © treatments

Fire regime

Figure 1—Fire management decision cycle through time.

actions derive from management and policy goals that are developed in the political
process, and generally informed by science. The entire process takes place within a
larger context of weather and other exogenous factors largely beyond the control of
forest managers and policymakers.

Also of interest, although not included in figure 1, are long-term effects of other
management actions such as harvesting and grazing that may be unrelated to spe-
cific wildfire management and policy goals, but may indirectly affect the wildfire
regime by their direct impacts on forest structure, density, and species composition.
In Southwestern ponderosa pine forests, for example, logging practices that exposed
mineral soil to pine seedling establishment combined with grazing, which reduced
competition from other species, contributed to abundant pine regeneration in the
early 1900s, resulting in dense pine thickets in present-day forests (Covington and
Moore 1994: 44). More generally, grazing can contribute to reducing fine fuels (for
example, Graham and others 2004: 3). The long-term effects of fuel treatments and
wildfire must be considered within a larger management and policy context that
includes evaluating the effects of wildfire suppression and postfire restoration, as
well as other management actions that may be unrelated to fire. Although manage-
ment and policy goals, and perhaps weather, may change over time, the cycle of
forest management decisions and wildfire effects continues through time, repeating
year after year. To simplify the foregoing figures, we will henceforth show the cycle
without the dimension of time (fig. 2).

The particular forest conditions that exist on a given landscape produce an
annual flow of benefits that are valued by society (fig. 3). Benefits might include

The long-term effects
of fuel treatments
and wildfire must be
considered within

a management and
policy context that
includes evaluating
wildfire suppression
and postfire restora-
tion, as well as other
management actions
unrelated to fire.

RESEARCH NOTE PNW-RN-542

Fire
suppression

Fire regime

Postfire Fuel
restoration treatments

Figure 2—Simplified fire management decision cycle eliminating the
dimension of time.

the production of timber and other wood products, recreation, scenery, habitat for
fish and wildlife, and reliable sources of clean freshwater, among others. Wildfires
may either increase or decrease the annual flow of particular benefits, depending
on how they affect particular forest characteristics. For example, wildfire might
decrease recreation benefits associated with large trees if they are killed by heat or
fire, but might increase recreation benefits in a shrub-dominated setting by clear-
ing underbrush and creating a more open forest. Wildfire effects on forest benefits
also can change over time. For example, recreation might be significantly curtailed
immediately following wildfire by damage to access and facility infrastructure.
However, over time, opportunities to view the aftermath of wildfire, and resulting
processes of forest recovery such as wildflowers, may attract numbers of recreation-
ists exceeding prefire visitation rates (Englin and others 2001, Loomis and others
2001). The conceptual framework allows for the possibility that wildfire might be
beneficial in some landscapes while accounting for its potential costs and damages
that make it harmful in other landscapes.

Fire-related management actions, such as fuel treatments, wildfire suppres-
sion, and postfire restoration, produce financial costs in the years in which they are
planned and implemented. These costs sometimes can be partially offset by sales of
timber and other wood products produced during thinning and harvest treatments.
Management actions also may produce nonfinancial costs, such as smoke in the
case of prescribed burning. Additionally, the wildfire regime produces costs associ-
ated with smoke and property damage caused by wildfires (fig. 3). As with forest

benefits, costs resulting from management actions and wildfires can vary over time,

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

Forest
benefits

Postfire Fire
restoration suppression

| Fire regime

Fuel
treatments

Figure 3—Fire management decision cycle with resulting annual benefits and costs.

depending on the particular forest conditions present, the types of management
actions implemented, and the types of wildfires that burn. For example, we would
expect that successful fuel treatments would reduce wildfire severity and lead to
lower wildfire suppression costs in the years following their implementation, but
their effectiveness might wane as forest growth and succession gradually increase
fuel loads over the longer term. The beneficial effects of fuel treatments in reducing
wildfire severity, intensity, and extreme wildfire likelihood diminish over time.

Evaluating Fuel Treatments

The objective of fuel treatments on a given forest landscape is to maintain or
enhance the annual flow of forest benefits and reduce costs associated with wild-
fires, by reducing the intensity, severity, and likelihood of extreme wildfire events.
A simple conceptual example spanning a single fire year shows factors that would
be involved in evaluating the costs and benefits of alternative fuel treatment sce-
narios. Suppose a fuel treatment—a thinning—is considered on a forest prior to
fire season in a given year (fig. 4). For simplicity, assume that it is possible for
only one extreme wildfire event to occur on the forest in any single year. Without
the thinning, either one of two things can happen: (1) no fire occurs and the forest
simply adds a year’s growth (fig. 4a) or (2) a fire occurs—call it fire x—requiring
a particular level of suppression and postfire restoration effort specific to fire x and
mandated under current forest policy (fig. 4b). If, instead, the thinning is conducted,
either one of two things can happen: (1) no fire occurs and the forest, after its altera-
tion by thinning, adds a year’s growth (fig. 4c) or (2) a different fire occurs—call it

RESEARCH NOTE PNW-RN-542

Evaluating the

costs and benefits
of fuel treatments
necessitates
considering net
benefits expected

to result with and
without treatments,
and with and without
wildfires that may or
may not occur.

Thinning
treatment

Fire y
suppression
Zz

Postfire x Thinning
restoration treatment

Figure 4—Example outcomes with and without fuel treatment.

fire y—requiring a level of suppression and postfire restoration effort specific to
fire y and mandated under current forest policy (fig. 4d).

Each of the four outcomes results in a particular set of costs and benefits (fig. 5).
With no thinning and no fire, we get annual forest benefits a and no costs. With no
thinning and fire x, we get annual forest benefits b, as well as suppression and post-
fire restoration costs, and smoke and property damages associated with fire x. With
thinning and no fire, we get annual forest benefits c and thinning costs. Assume for
now that thinning costs are net of any revenue generated from sales of any resulting
timber and other wood products outputs. With thinning and fire y, we get annual
forest benefits d and thinning costs, as well as suppression and postfire restoration
costs, and smoke and property damages associated with the fire y.

If the thinning was successful as a fuel treatment, we would expect fire y to be
less likely, smaller, less intense, or less severe than fire x, resulting in lower suppres-
sion and postfire restoration costs, less smoke, and fewer property damages. How-
ever, whether the thinning makes economic sense would depend on the incremental
change in annual net benefits we can expect by conducting the thinning, over and
above those we can expect without the thinning. This incremental change in annual
net benefits depends on thinning costs as well as incremental changes in annual for-
est benefits resulting from changes in forest conditions brought about by thinning,

and any resulting wildfires, fire suppression, and postfire restoration that follow. It

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

Forest benefits a

' Forest benefits 6

Postfire x
restoration

Forest benefits c

Thinning
treatment

' Forest benefits d

Postfire y Thinning
restoration treatment

Figure 5—Example outcome benefits and costs with and without fuel treatment.

RESEARCH NOTE PNW-RN-542

also depends on the likelihood, intensity, scale, and severity of fire x, and the degree
to which thinning reduces the likelihood, intensity, scale, and severity of fire y
below that of fire x.

Economists would evaluate the value of net benefits associated with a pro-
posed fuel treatment, such as thinning, by comparing the total expected value of
net benefits to be gained with the treatment (fig. Sc, d), to the total expected value
of net benefits to be gained without treatment (fig. Sa, b)—the “baseline” (Office
of Management and Budget 1996: 10). Total expected values of net benefits in each
case would comprise the annual costs and benefits associated with both the fire and
no-fire potential outcomes, weighted by the likelihood of each fire occurring, and
discounted over time. Evaluating the total expected value of costs and benefits of
proposed fuel treatments necessitates considering net benefits expected to result
with and without treatments, as well as with and without the wildfires that may or

may not occur.

Cost-Benefit and Alternative Analyses

Given sufficient information, the costs and benefits resulting from different sets of
forest conditions, management actions, and wildfires could be evaluated by using
cost-benefit analysis to evaluate incremental changes in the total discounted net
benefits resulting from alternative fuel treatment scenarios over time. Cost-benefit
analysis involves a systematic accounting of all relevant changes in costs and ben-
efits associated with resource changes generally in terms of a single metric, such as
dollars, to evaluate the social profitability of that change (Johansson 1993: 1). Cost-
benefit analysis attempts to enumerate all that is good and bad about a resource
change by using a common measure. In this case, costs would include the direct
cost of conducting fuel treatments, as well as costs of suppression, postfire restora-
tion, and smoke and property damages associated with any wildfires (table 1).

In forestry, benefits are determined by socially desired outputs produced from
existing forest conditions, and the values society places on those outputs. Examples
of forest benefits include timber and nontimber forest products, range and forage,
freshwater, flood protection, terrestrial and aquatic habitat, wildlife, recreation,
scenery, and carbon sequestration (table 1). Some examples of output measures for
different forest benefits are timber volumes produced, numbers of recreation visi-
tor-days, and tons of carbon sequestered. Values for some of these outputs, such as
timber, can be determined from market prices. Other outputs, such as recreation,
may involve nonmarket values, which often can only be determined by using indi-
rect methods such as user surveys. Examples of value measures related to different

forest outputs are prevailing timber prices, forest visitors’ willingness to pay for

10

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

Table 1—Example costs and benefits relevant to examining the net benefits
resulting from fuel treatment scenarios

Example costs Example benefits”

Fuel treatment costs Timber and nontimber forest products
Fire suppression costs Grazing

Smoke from wildfires and prescribed burns Ecological benefits (wildlife, fish,

, ns a water quality, clean air
Postfire restoration and rehabilitation costs q y )

: : ‘ Recreation
Fire-related damages to private property, public

buildings, roads, and other infrastructure Scenery and aesthetics

Carbon sequestration

“Based on Haynes and Horne (1997: 1818).

a day of recreation, and perhaps sequestered carbon values based on actual emis-
sions-trading transactions.

Values for some forest benefits also may include combinations of use and non-
use values. Use values are values people hold for specific uses of natural resources
and may include consumptive uses, such as timber harvesting, and nonconsump-
tive uses such as sightseeing (Rideout and others 1999b: 10). Nonuse values do not
involve direct use of natural resources and may include option (knowing a resource
will be available for future personal use), existence (knowing a resource exists even
when the likelihood of using it is small), bequest (knowing future generations will
be able to enjoy the resource), and stewardship (knowing forests are maintained in a
healthy condition) values (Haynes and Horne 1997: 1817). Evaluating nonuse values
associated with natural resource management actions typically is more complex and
often attracts more controversy than does evaluating use values.

Enumerating the costs and benefits associated with fuel treatment scenarios
involves compiling output and value measures describing all relevant benefits
produced over time by different combinations of forest conditions resulting from
treatments and wildfires, and all relevant costs incurred over time from fire-related
management actions, smoke, and property damages. Care is necessary to avoid
double counting. Incremental increases in costs resulting in one scenario often can
be represented as incremental reductions in forest benefits, and vice versa. Costs
associated with lost recreation caused by wildfire, for example, also can be repre-
sented as reduced recreation benefits. Certain costs and benefits also can manifest
themselves in multiple ways. Lost soil nutrients, for example, can be reflected in

less timber production in future years.

11

RESEARCH NOTE PNW-RN-542

Enumerating all costs
and benefits resulting
from management
actions often is not
possible owing to

a general lack of
information describing
changes in forest
benefit outputs and
their values.

12

Although conceptually feasible, enumerating the full range of costs and benefits
resulting from forest management actions often is not possible in practice owing to
a general lack of information describing changes in forest benefit outputs and their
values. Output measures that may exist for one landscape, such as expected num-
bers of a particular wildlife species given a set of forest conditions, for example,
may not be transferable to other landscapes possessing different characteristics.
When such measures do exist, they often may not support evaluating potential
wildfire and fuel treatment effects, because they may not be based on data relevant
to analyzing such effects. Similarly, the relatively limited body of information de-
scribing forest benefit values tends to be quite specific to particular outputs, such as
specific fish or wildlife species or specific recreational activities, and is altogether
absent for a wide range of forest outputs. The general lack of information describ-
ing forest benefit outputs and values and their sensitivity to wildfires and fuel
treatments is the most significant obstacle to cost-benefit analysis of fuel treatments.
Indeed, use of cost-benefit analysis in fire management and policy decisionmaking
has been proposed at least since the 1970s (Gorte and Gorte 1979, Mills and Bratten
1982) but has been hampered by difficulties in measuring changes in forest outputs

and their values resulting from management and policy alternatives proposed.

What About Jobs?

Federal projects and programs (including fuel treatments) often are advocated,
because they create jobs—jobs are noted as a benefit. When newly created jobs are
included in a cost-benefit calculation, the net benefits of pursuing a project or pro-
gram appear more attractive (Johansson 1993: 84). However, whether jobs creation
justifiably can be considered a benefit in cost-benefit analyses is debatable. One
reason is that wages paid to workers newly employed by federal projects or pro-
grams are monies that are transferred from federal taxpayers to workers (Mishan
1982: 81-82). Cost-benefit analyses of actions on federal lands or those paid with
federal funds usually are conducted by using a national accounting stance (Althaus
and Mills 1982: 5; Rideout and others 1999a: 221), considering costs and benefits to
all residents of the United States rather than distinct regions. Viewed from a na-
tional accounting stance, increased wages paid to workers in a particular region are
offset by increased taxes paid by all taxpayers, resulting in zero net benefit. Also,
because jobs gained,(or lost) in a given region from federal management or policy
changes usually are lost (or gained) somewhere else (Loomis 2000: 11; Sassone and
Schaffer 1978; U.S. Water Resources Council 1983), counting jobs creation as a
benefit in one region discounts potential job losses in other regions. Advocating fuel

treatments as a way to provide jobs in a particular region thus assumes that there

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

is some social benefit to favoring that particular region over all others, as far as
economic effects are concerned.

Another reason why jobs usually are not counted as a benefit in cost-benefit
analyses is that under generally full employment, wage rates just compensate
workers for their time—what workers gain in wages they lose in leisure—so that
the employment of additional new workers results in zero net benefit (Sugden and
Williams 1978: 95). With full employment, all individuals who desire work have
jobs, and unemployed individuals are either indifferent between working and not
working or value their leisure time at greater than prevailing wages. During times
of relative unemployment, however, individuals may desire work at prevailing
wages but may be unable to find jobs. With unemployment, prevailing wages might
more than compensate unemployed workers for their time, resulting in a net benefit
to newly employed workers that partially offsets wage costs incurred by employ-
ing agencies (Sugden and Williams 1978: 102-104). Also, there can be some public
benefit to not letting job skills grow stale or unemployed workers become depressed
or disillusioned with the job market. For these reasons, a stronger case can be made
for federal projects and programs in times of low employment, if they employ
otherwise idle workers (Mishan 1982: 315).

Still, economists tend to place a “heavy burden of proof” on including indirect
benefits such as jobs creation in cost-benefit analyses (Randall and Peterson 1984:
23). Even with unemployment, new jobs might only be counted as a benefit when
unemployment is persistent and the workforce is immobile (McKean 1958, Randall
and Peterson 1984: 23). If fuel treatments are advocated as a source of rural com-
munity development, the case must be made that workers cannot reasonably find
suitable work opportunities elsewhere. Although cost-benefit analyses might
comment on the extent of employment effects, formally accounting for those
effects typically is left to economic impact analysis (Smith 1986: 23).

Economic Impacts

The socioeconomic effects of forest management actions also can be evaluated by
using economic impact analysis, which differs from cost-benefit analysis. Cost-ben-
efit analyses evaluate the total net effects of actions on the welfare of all individuals
affected by those changes (Sugden and Williams 1978: 89). Cost-benefit analy-

ses usually are indifferent to “interregional re-distributive effects” (Randall and
Peterson 1984: 23) and do not give greater weight to welfare changes experienced
by individuals in one region over another. As already noted, a national accounting
stance—evaluating welfare effects to all residents of the United States—generally

is most appropriate when evaluating management actions involving federal lands or

RESEARCH NOTE PNW-RN-542

14

funds. Economic impact analyses, on the other hand, evaluate the regional effects
of actions on prices, outputs, employment, and other economic factors, focusing
on how those effects are distributed across regions (Smith 1986: 30). Cost-benefit
analyses do not necessarily ignore these distributive effects and may even include
evaluating their extent, but they typically are not included as specific numerical
costs or benefits (Smith 1986: 23).

For example, a cost-benefit analysis might include accounting for hikers’
higher willingness to pay for better hiking conditions, perhaps owing to a profu-
sion of wildflowers resulting from one fuel treatment alternative versus another. An
economic impact analysis, on the other hand, would evaluate increases in local or
regional economic activity associated with more hikers visiting a particular location
to enjoy the increase in wildflowers. Although both cost-benefit and economic im-
pact analyses might be used to evaluate the socioeconomic effects of management
and policy actions, neither typically would be regarded as binding decision crite-
ria for selecting one management or policy alternative over another. Rather, both
analyses would offer sets of information that managers and policymakers could use

to evaluate management and policy alternatives.

Cost-Effectiveness Analysis

Difficulties in accounting for all possible costs and benefits resulting from alterna-
tive fuel treatment scenarios arise from the broad range of forest benefits valued by
society and the expense and complexity involved in their measurement. For this rea-
son, modern economic analyses of fire management actions have tended to bypass
cost-benefit analysis in favor of cost-effectiveness analysis (for example, Omi and
others 1998, 1999). Cost-effectiveness analyses address problems involving outputs
that cannot be evaluated by using market prices, but where inputs can be evaluated
(Niskanen 1967: 18). It involves identifying physical measures of accomplishments
that can be tracked to the costs associated with alternative treatments, to identify
those treatments that are most cost-effective—achieve the greatest accomplishment
at a given cost (Rideout and others 1999a: 222). Ideally, accomplishment measures
are proxies for forest benefits of interest for which reliable output and value meas-
ures may be unavailable. Changes in fuel loads or burned area, for example, might
be used in place of changes in biodiversity benefits, the extent and value of which
may be difficult to reliably measure. Cost-effectiveness analyses enable managers
to compare the potential outcomes of different treatment alternatives and to make

informed choices regarding fire management (Rideout and others 1999a: 223).

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

Although cost-effectiveness analyses sidestep the potential difficulties and
expense of measuring forest benefit outputs and values, selecting appropriate ac-
complishment measures and relating them to fuel treatment costs are challenging.
Accomplishment measures, after all, are similar to resource effects models describ-
ing output levels resulting from different treatment inputs. In some cases, accom-
plishment measures may be as difficult or expensive to identify as actual forest
benefit output and value estimates, or may poorly represent particular forest benefits
of interest. A large part of estimating the value of changes in nonmarket benefits
often is simply identifying what benefits are affected (see for example, Driver and
Burch 1988: 34). Finally, avoiding the necessity of examining changes in forest

benefit values ignores the possibility that marginal values are nonconstant—that

the incremental value of saving the 1,000""-to-last spotted owl, for example, might Not addressed

be lower than the incremental value of saving the very last spotted owl. Care must by cost-benefit,

be taken to ensure that accomplishment measures chosen for cost-effectiveness
analyses adequately represent the public’s objectives and interests regarding wild-
fire management.

Despite these drawbacks, cost-effectiveness analyses can provide a useful
analytical alternative in cases where cost-benefit analysis may be infeasible. Cost-
benefit analysis is intended to identify alternatives whose benefits exceed their
costs, and provides a framework for comparing alternatives, giving preference to
those yielding the greatest net gains. In contrast, cost-effectiveness analysis can
be used to identify least-cost alternatives for achieving a target accomplishment
level but does not provide guidance on which specific accomplishment level might
be preferred over another. Ideally cost-benefit analysis would encompass cost-
effectiveness analysis, enabling managers to select the best accomplishment level

as well as the least-cost means of achieving it.

Equity Considerations

economic impact,

and cost-effectiveness
analyses are equity
issues related to who
gains and who does
not when public
agencies invest in

fuel treatments.

Not addressed by cost-benefit, economic impact, and cost-effectiveness analyses are
equity issues related to who gains and who does not when public agencies invest in
fuel treatments. All taxpayers bear the financial costs of fuel treatments. However,
those who gain might include neighboring property owners who benefit from re-
duced wildfire threat and averted wildfire-related property damages, and individu-
als who use or value particular forest benefits that could be lost in large severe fires.
Fuel treatments can affect the welfare of individual citizens differently because
individuals often bear unequal tax burdens associated with fuel treatment costs and
reap unequal net gains and net losses from resulting changes in forest benefits and

wildfires.

15

RESEARCH NOTE PNW-RN-542

One way of thinking about equity considerations is to consider the potential
impacts of fuel treatment investments on three groups: timber producers, consum-
ers, and landowners. If fuel treatments such as thinning increase federal harvests
of merchantable timber in a region, private timber producers and landowners who
grow, manage, and harvest timber are likely to lose when the increased supply of
wood to timber markets results in lower stumpage prices. Lower stumpage prices
also can reduce the wealth of private timberland owners, potentially reducing their
ability to invest in particular forest management practices that protect or enhance
nontimber values such as wildlife and riparian habitat or forest recreation. On
the other hand, lower stumpage prices are likely to benefit wood processing mills
and consumers who would pay less for timber and wood products. The impacts
to different groups can differ by region. For example, mills benefiting from lower
stumpage prices resulting from fuel treatments in one region may temporarily gain
comparative advantages in wood production over competing mills paying higher
stumpage prices in other regions.

Sometimes who gains and who does not can be somewhat ambiguous. For
example, in some respects the issue of wildfire and homes located in forests—the
wildland/urban interface—is similar to building homes in flood plains or coastal
zones. It can be argued that property owners put themselves at risk by locating
homes in fire-prone forests. Wildfire research suggests that building ignition prob-
ability is largely a function of materials, design, and characteristics of fuel within
‘‘a few tens of meters” (Cohen 1999: 193), all of which may be at the discretion of
homeowners themselves. A reasonable question then might be why fuel treatments
largely intended to avert potential property damages of a few select individuals
should be paid by using the tax dollars of the general public. It also could be argued,
however, that long-term wildfire suppression on public lands has increased wildfire
threat above the level it would have been in the absence of long-term wildfire sup-
pression, effectively imposing a cost on neighboring property owners in the form
of greater current wildfire threat. Who then should be held responsible for property
losses caused by wildfire—neighboring property owners who build their homes in
fire-prone forests or public land management agencies whose history of wildfire
suppression may have led to higher wildfire threat? The answer is not necessarily
easy and depends on how society entitles different rights and responsibilities to
each party.

There can also be environmental justice issues associated with where and when
fuel treatments are implemented and whether they might benefit or harm differ-
ent groups of people disproportionately. Generally, environmental justice concerns

relationships between race, poverty, and environmental problems, benefits, and

16

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

remediation (for example, Floyd and Johnson 2002). Environmental justice can be
relevant in the context of wildland fire if fuel treatments benefit specific groups of
people more than others or to the detriment of others. If, for example, political pres-
sure from relatively affluent landowners results in a disproportionate amount of fuel
treatment effort expended in a vacation community largely comprising the second
homes of relatively wealthy people, less affluent landowners may perceive fuel treat-
ment resources as lacking in their own communities. At the extreme, distributing
fuel treatment efforts in a manner that unevenly affects particular groups of land-
owners has the potential to raise troubling liability issues should a wildfire result in
significant property damage or loss of life in untreated areas.

A complicating factor regarding wildfire and the wildland/urban interface in
particular is the poorly defined federal role in protecting private property from wild-
fire (Hesseln and Rideout 1999: 183). Although the public generally expects some
wildfire protection, federal policy does not formally extend protection and manage-
ment to private lands. A misconception prevails among elected officials, managers,
policymakers, and the public that protecting private property is the responsibility
solely of fire service agencies and organizations (USDI and USDA 1995), with prop-
erty owners seemingly bearing little accountability. To the contrary, federal fire pro-
tection of private property within the wildland/urban interface might be considered
by many taxpayers as unfair, because tax dollars paid by the general public are used
to protect property owned by select individuals who choose to locate their homes in
fire-prone forests. Such issues have led to past interagency efforts to clarify federal
roles and responsibilities in protecting structures from wildfire (USDI and USDA
1995). However, a lasting solution to more efficient and equitable wildfire policy
regarding the wildland/urban interface might include billing property owners for
expenses associated with wildfire suppression and fuel reduction, and ensuring that
insurance rates accurately reflect wildfire risks in forest landscapes (Hesseln and
Rideout 1999: 183-184).

A Simple Cost-Benefit Numerical Example

A simple numerical example helps show the types of information that would have
to be considered when computing the costs and benefits of fuel treatments. The
example is for illustrative purposes only, and is not intended to reflect actual net
benefits resulting from any particular fuel treatment scenario. The example, how-
ever, does reveal key factors that would characterize fuel treatment scenarios likely
to result in positive net benefits. Imagine an acre of forest on which a fuel treatment
costing $90 is being considered. Assume that the annualized timber and nontimber
benefits generated by this forest acre total $100 per year, and that these benefits

RESEARCH NOTE PNW-RN-542

18

would be neither increased nor decreased directly by the fuel treatment itself—
that is, they are affected only by the manner in which the fuel treatment alters the
wildfire regime. For simplicity, we will compute the expected value of net benefits
resulting from the fuel treatment over only a 3-year planning horizon (table 2).

If we do not conduct the treatment, one of four things can happen: (1) no fire oc-
curs, (2) a fire occurs in year 1, (3) a fire occurs in year 2, or (4) a fire occurs in year
3. We will assume that only one fire can occur during the 3 years, again for simplic-
ity. Assume that without the fuel treatment, the likelihood of a wildfire requiring
some level of suppression occurring in any year is | in 20, or 0.05. Assume also that
if a fire did occur, it would reduce annual benefits produced by the forest acre by
100 percent the year of the fire, 75 percent the year after the fire, and 50 percent the
second year after the fire. Additionally, assume that the fire would result in suppres-
sion costs, smoke, and property damages totaling $600. Given these assumptions,
the present values of net benefits that would result from each scenario without fuel
treatment are computed as $288 if no fire occurs, -$530 if a fire occurs in year 1,
-$454 if a fire occurs in year 2, and -$359 if a fire occurs in year 3 (table 2).

Similarly, we can compute the present value of net benefits that would result
from each of four possible scenarios with fuel treatment. Assume that the fuel treat-
ment would reduce the likelihood of wildfire requiring suppression by 80 percent
in years | and 2, from 0.05 to 0.01, and by 60 percent in year 3, from 0.05 to 0.02.
Assume also that if a fire did occur, it would be smaller and less intense, reducing
annual benefits produced by the forest acre by only 50 percent the year of the fire,
25 percent the year after the fire, and none the second year after the fire. Addition-
ally, assume that this potential fire would result in lower suppression costs, smoke,
and property damages than those resulting from the potential fire without fuel treat-
ment: 75 percent lower if the fire occurred in year | (the year of the treatment), and
50 percent lower if the fire occurred in either years 2 or 3. Given these assumptions,
the present values of net benefits that would result from each scenario are computed
as $288 if no fire occurs, $64 if a fire occurs in year 1, -$71 if fire occurs in year
2, and -$35 if a fire occurs in year 3 (table 2).

The expected value of net benefits resulting from the fuel treatment is the dif-
ference between the total expected value of net benefits resulting from all scenarios
possible without fuel treatment, and the total expected value of net benefits resulting
from all scenarios possible with fuel treatment less treatment cost (table 3). Those
expected values depend on the likelihood that different wildfires occur with and
without treatment. We have assumed that without fuel treatment the likelihood of a
wildfire occurring in any year is 0.05, and that the fuel treatment reduces that likeli-
hood to 0.01 in years 1 and 2, and 0.02 in year 3. The likelihood that no fire occurs

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19

RESEARCH NOTE PNW-RN-542

Table 3—Example computation of expected value of discounted (r = 0.04) net benefits resulting with and
without fuel treatment on one forest acre

Without fuel treatment With fuel treatment
Potential Assumed Present value of | Expected value Assumed Present value of | Expected value
scenarios likelihood potential net benefit net benefits likelihood potential net benefit net benefits
------ Dollars - - - - - - ------ Dollars - - - - - -
No fire occurs 0.85 288 245 0.96 288 276
Fire in year | 05 -530 -26 Ol 64
Fire in year 2 05 -454 -23 01 -71 -|
Fire in year 3 05 -359 -18 02 -35 -]
Total 178 275
Treatment cost — -90
Revised total 178 185

Note: Fuel treatment cost is assumed to be $90. Potential net benefits computed in table 1. Expected value equals likelihood times
potential net benefit.

during the 3-year planning horizon then 1s 0.85 without fuel treatment, and 0.96
with fuel treatment. Given these probabilities, the expected value of net benefits re-
sulting without fuel treatment total $178, whereas the expected value of net benefits
resulting with fuel treatment total $275 less the $90 cost of treatment, or $185 (table
3). In this example, the expected value of net benefits resulting from the proposed
fuel treatment on our imaginary forest acre equals $7 ($185—$178), slightly favor-
ing conducting the treatment.

The example simplifies the analysis in several ways. We have considered only
a single forest acre, but we want to consider the spatial and temporal effects of fuel
treatments over large landscapes. We have used only a 3-year planning horizon, but
at a minimum we would want to consider the net benefits of fuel treatments over
their expected duration of effectiveness. We have assumed that only one wild-
fire can occur and have not accounted for the diversity in wildfire conditions and
behavior that are possible. We have only guessed at the values of key parameters:
the likelihood of wildfire, the value of forest benefits and wildfire costs, and how
each of these is affected by fuel treatment. We have assumed that the fuel treatment
affects forest conditions only indirectly by its impact on the wildfire regime, rather
than directly by altering forest conditions. We have not considered the potential
beneficial effects that wildfires may have in reducing the likelihood, intensity, scale,
and severity of future wildfires by reducing fuel. Despite these shortcomings, the
example shows how several factors contribute to determining the net benefits likely

to result from fuel treatments in different locations.

20

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

General conclusions can be gleaned from the example computations, and arise
as much from common sense. The expected value of net benefits resulting from
fuel treatments will most likely be positive when combinations of the following
conditions exist: (1) timber and nontimber forest benefits are high and would be
significantly and adversely affected by wildfire for long periods; (2) potential costs
resulting from wildfire, including wildfire suppression and postfire restoration,
smoke, and property damages, are high and would be significantly reduced by fuel :

< ra ve tS: Ideally, there is an
treatments; (3) wildfire threat is high and would be significantly reduced by fuel ;
° ‘ ‘ optimal strategy of fuel
treatments; (4) the effects of fuel treatments in reducing potential benefit losses and mates
; ; . : i treatments, wildfire
wildfire costs and reducing wildfire threat are relatively lasting; and (5) fuel treat- .
: en: ; suppression, and
ment costs are relatively low, but treatment significantly reduces wildfire threat. ‘ ;
; : : postfire restoration

Evaluating the net benefits of fuel treatments by using cost-benefit analysis niger
; ' i cgi de that maintains forest
involves accounting for fuel treatment costs, potential changes in wildfire suppres- : : ;

: ; benefits while lowering
sion and postfire restoration costs, and smoke and property damages resulting from
é ; } ‘ : smoke and property

alternative fuel treatment scenarios. Evaluating net benefits also involves consid- .

: ‘ a ! : damages at a price
ering how fuel treatments will affect forest conditions and their associated forest :

; ; at ’ society can afford.

benefits, directly by reducing fuel through thinning or prescribed fire for example,
as well as indirectly by changing the likelihood, intensity, scale, and severity of
wildfire. Any cost-benefit analysis of fuel treatments would need to obtain informa-
tion pertaining to each factor sufficient to meet prevailing demands for scientific
quality in forest management and policymaking. Such information, however, may

not always be available.

A Brief Summary of Existing Information

Ideally, there is some optimal strategy of fuel treatments, wildfire suppression, and
postfire restoration that maintains or enhances forest benefits while lowering smoke
and fire-related property damages at a price society is willing and able to afford.
Determining that optimal strategy, if indeed one exists, is a difficult task. Evaluat-
ing the net benefits of fuel treatments involves accounting for several factors: the
cumulative cost of fuel treatments, the likelihood of extreme wildfire events with
and without treatments, the effects and costs of fire suppression and postfire resto-
ration, and the combined influence of management actions and wildfires on forest
conditions and forest benefits over time. Although no comprehensive analyses exist,
forest researchers have begun examining parts of the problem. A brief review of the
state of current knowledge regarding wildfires and fuel treatments reveals a number

of issues pending further research and policy development.

21

RESEARCH NOTE PNW-RN-542

22

Fuel Treatment Costs

The total cost to reduce fuels on 39 million acres nationally identified as high
wildfire risk has been estimated as high as $725 million per year through fiscal
year 2015, but these costs likely could be reduced by targeting areas at highest risk
(General Accounting Office 1999: 45). Several types of fuel treatments typically are
proposed to reduce wildfire threat, including prescribed burning, precommercial
thinning, pruning, commercial timber harvests, and other mechanical treatments.
The effectiveness of any treatment differs depending on prevailing forest condi-
tions where it is implemented. Fuel treatments themselves also involve some risk.
Prescribed burning, for example, generates smoke and under rare circumstances
can itself result in catastrophic wildfire, as exemplified by the 2000 Los Alamos fire
in New Mexico. Commercial timber harvesting and its resulting slash, as well as
precommercial thinning, pruning, and other mechanical treatments can temporarily
increase ground fuels, which must be properly treated to minimize their contribu-
tion to wildfire threat (Gorte 2000: 10-15). Prescribed burning also can increase
fuel in the years immediately following a burn, as a result of fire-induced mortality.

Although the effectiveness and resulting net benefits of fuel treatments are not
always certain, potential implementation costs generally are known. The costs of
USDA Forest Service fuel treatments in fiscal years 1998 and 1999, comprising
mostly prescribed burning in the South, were $34 and $46 per acre, repectively.
Costs can, however, range as high as $1,500 per acre depending on location, fuel
load, and the extent of thinning (Gorte 2000: 15). Average forest fire protection
expenditures per acre from 1987 to 1995— those typically spent on prescribed
natural fire or management-ignited prescribed fire—differ widely by region, from a
low of $13 (1995 dollars) per acre in Region 8 (Southern) to $381 per acre in Region
10 (Alaska). Average expenditures per acre in other regions fall in between: $23 in
Region 3 (Southwestern); $47 to $71 in Regions 2 (Rocky Mountain), 4 (Intermoun-
tain), 6 (Pacific Northwest), and 9 (Eastern); $85 in Region | (Northern); and $130
in Region 5 (Pacific Southwest) (Schuster and others 1997: 23).

Fuel treatment costs also differ by treatment type. Estimated average costs per
acre for prescribed burning conducted by national forests from 1985 to 1994 were
$172 (1995 dollars) for slash reduction burning, $80 for management-ignited pre-
scribed fire, $107 for prescribed natural fires, $59 for brush, range, and grassland
prescribed fire, not including Region 10 (Cleaves and others 2000: 17). These costs,
too, can differ by region depending on management and policy objectives, burning
conditions, and site characteristics. Treatment scale (size of treated area) and labor
costs often are cited as the most important factors influencing cost (Cleaves and
others 2000: 17).

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

In the case of prescribed burning, institutional constraints and policy guide-
lines regarding the scale of burns also are important factors influencing costs
(Gonzalez-Caban 1997: 542). For example, new and stricter regulation of atmo-
spheric particulate matter by the Environmental Protection Agency will increas-
ingly oblige forest managers to comply with state-approved smoke management
programs when planning and carrying out prescribed burns (Mahaffey and Miller
2001, Riebau and Fox 2001). Also of note are increasing costs associated with regu-
lation, permitting, liability risks, and insurance costs (Cleaves and Haines 1997,
Hesseln 2000).

Wildfire and Fuel Treatment Effects

An important factor affecting whether the benefits of fuel treatments outweigh
their costs is the degree to which fuel treatments incrementally reduce the likeli-
hood of severe intense wildfires. Despite significant recent media coverage, wild-
fires typically affect only a small proportion of the forest landscape in any given
year. The average annual acreage burned between 1990 and 1999, considered a
relatively bad recent decade for fire, averaged 554,577 acres on USDA Forest
Service-protected land and 3.1 million acres on other protected land (Gorte 2000:
5). With almost 747 million acres of forest land under public and private ownership
in the United States (Smith and others 2001: 63), the decadal average annual burned
area represents just under 0.5 percent of the total. This rate is fairly consistent with
decadal averages over the past 40 years and well below those experienced during
the first half of the 20" century (fig. 6). Although decadal averages have remained

relatively constant in recent decades, significant fluctuation in annual acreage Any analysis
burned from one year to the next does occur. Total acres burned in 2000 (8.4 mil-

, iad : al must make a
lion) and 2002 (6.9 million), for example, were higher than average (4.1 million)

over the past four decades (1960-2003) (fig. 7).

Much of the general decline in burned acreage during the a0 century has been

reasonable attempt

at characterizing

: ; : ; the existing wildfire

due to greater wildfire prevention and suppression efforts by the Forest Service ) ;
regime and how it

and other land m t ies during th iod. Th fforts gener-
anagement agencies during the same perio ese e g ean Ge altered ’by

ally are viewed as resulting now in increased fuel loads and increased potential for
aah ; fuel treatments.

larger, more catastrophic wildfires. Recent trends suggest that the proportion of to-

tal acres burned by large intense wildfires may be increasing (General Accounting

Office 1999: 29). For example, although the total number of wildfires generally has

been decreasing since 1981, the number of acres burned per fire does appear to be

increasing (fig. 8). It is primarily this recent trend in acres burned by large intense

wildfires, and accompanying increases in wildfire suppression and postfire restora-

tion costs, that is motivating our current national interest in fuel treatments.

23

RESEARCH NOTE PNW-RN-542

@ Forest Service-protected lands
Other protected lands

Oo
2
o
©
=

2
=
—
3
®
=
iJ
=
re)
©
2
<

Figure 6—Decadal average annual acreage burned on Forest Service-protected and other protected
lands, 1920 to 1999 (Gorte 2000: 5). Under several cooperative agreements developed to improve
protection efficiency, the Forest Service protects some nonfederal lands while other organizations
protect some national forest lands. The total acres protected by the Forest Service roughly equals the
acres in the National Forest System (Gorte 2000: 4).

Area burned (million acres)

0
1960 1965; adoro 1975 1980 1985 1990 1995 2000

Year

Figure 7—Total acres burned by all fires, 1960 to 2003 (National Interagency Fire Center 2004b).

24

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

300

— Number of fires

250 — Average acres
burned per fire

200

150

100

Number of fires (thousands)

50

Average acres burned per fire

1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Figure 8—Number of fires and acres burned per fire, 1960 to 2003 (National Interagency Fire Center 2004b).

The uncertainty associated with where, when, and what types of wildfire will
occur presents significant challenges to evaluating the net benefits of fuel treat-
ments. Any analysis must make a reasonable attempt at characterizing the existing
wildfire regime and how it can be altered by fuel treatments. Two research areas
of particular interest in evaluating the costs and benefits of fuel treatments are
(1) efforts to forecast wildfire occurrence and (2) efforts to model fire as a stochas-
tic process. Efforts to forecast fire occurrence generally have relied on historical
data comprising the dates and locations of wildfires, such as national fire occur-
rence data (Schmidt and others 2002), to estimate probabilistic empirical models
describing wildfire occurrence as a function of geographic, topographic, and
weather-related factors. Such models have shown some potential for forecasting the
likelihood of wildfire occurring at a given time and location based on given weather
conditions (Brillinger and others 2003, Preisler and others 2003).

Efforts to model wildfire as a stochastic process generally rely on simulation
and optimization models to describe wildfire occurrence and resulting ecosystem
responses under different fuel treatment scenarios for well-defined geographic
areas. Examples of the evolution of this body of research include Wiitala and oth-
ers (1994), Schaaf and others (in press), Jones and others (1999, 2003), Weise and
others (1999, 2000), Merzenich and others (in press), and Chew and others (2000),

25

RESEARCH NOTE PNW-RN-542

26

among other studies. The objective of these studies generally is to determine which
fuel treatment strategies would be most cost effective in given locations, by predict-
ing the extent, intensity, and resource effects of wildfires likely to occur following
treatment. Model outputs that can be evaluated often include acres burned summa-
rized by intensity level, smoke, suppression costs, and various resource measures
describing forest and habitat conditions.

An important contribution of these research efforts is their accounting of the
complex probabilistic nature of wildfire and the degree to which fuel treatments
reduce the likelihood of severe intense wildfires. However, few attempts have been
made to express all potential wildfire impacts resulting from alternative fuel treat-
ment scenarios as changes in net benefits. Wildfire habitat effects, for example,
must be characterized in terms of changes in forest conditions resulting from fire.
Values of those changes are not always quantified or comparable to other wildfire
impacts, such as smoke emissions or increased stream sediment, because data
describing the values of such changes are lacking. These research efforts, however,
likely serve as a basis from which to conduct more comprehensive cost-benefit
analyses in the future, should sufficient information describing wildfire impacts

and forest benefit values become available.

Property Damage

A significant political motivation for conducting fuel treatments is protecting pri-
vate property located on forest landscapes at the wildland/urban interface. Homes
consumed by uncontrolled wildfire serve as dramatic footage for nightly news
broadcasts, fuelling public concern about fire. Effort expended to save homes often
is cited as a key factor in rising suppression costs (for example, Office of Manage-
ment and Budget 2002: 66). For these reasons, reducing fuel at the wildland/urban
interface has become a primary focus of forest policy on federal lands (for example,
USDA Forest Service 1995: 20). Ongoing research is identifying places where
housing and other developed uses are most at risk to potential wildfire (for ex-
ample, Kline 2004, Stewart and others 2003). Maps of the wildland/urban interface
increasingly can be combined with wildfire and fuel treatment effects models to
simulate potential private property losses resulting from wildfire under alternative
fuel treatment scenarios (for example, Jones and others, in press).

Research, however, suggests that home ignitability—a function of materials,
design, and fuel located within the immediate vicinity of homes—is the principal
cause of private property losses during wildfires (Cohen 1999, 2000). Fuel charac-
teristics beyond immediate home sites have little, if any, effect. Also, property

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

owners appear to be willing to pay for both public and private risk-reduction
activities (Fried and others 1999). For these reasons, reducing fuel on federal
lands to protect homes may be less effective or efficient than inducing homeowners

to reduce structure ignitability through private actions focused on the immediate

home site. Public efforts to reduce wildfire risks to private property through fuel There may be a need

treatments and wildfire suppression may even provide perverse incentives to pri- to rethink wildfire

vate landowners to locate homes on fire-prone landscapes, because they perceive policy to identify

wildfire risks are minimized (Rideout 2003). These issues suggest a need to rethink Situations in which

federal policy regarding wildfire to identify situations in which federal involvement federal involvement

in protecting private property from wildfire is appropriate. in protecting
private property is
Smoke appropriate.
Smoke from wildfires contributes carbon dioxide and other greenhouse gases to
the atmosphere and can threaten public health in nearby communities, cause smoke
damage and soiling of buildings and materials, disrupt community activities, and
reduce scenic values and highway safety by reducing visibility. Prescribed burning
also produces smoke, resulting in similar impacts and socioeconomic costs, though
these can be lessened by using appropriate smoke management practices. Smoke
often is the limiting factor determining where and when prescribed burning can be
feasible and legal under current air quality standards.
Existing smoke models characterize emissions based on burned area, fuel char-
acteristics, fire behavior, combustion stage, fuel or biomass consumption, and emis-
sion factors determined for different pollutants. In some cases, these models can
be incorporated into existing fire simulation models to examine smoke tradeoffs
between wild and prescribed fires. Smoke transport and dispersion also are impor-
tant in evaluating smoke effects on public health and welfare. Historical spatial data
describing windspeed and other climatic factors enable researchers to identify areas
most at risk from air quality and visibility impacts of smoke resulting from wild
and prescribed fire, and how risks change throughout the year (Ferguson and others
2003). Although such data can be useful in planning prescribed fires in locations
and at times of the year to minimize air quality and visibility effects, they likely
are not sufficient for evaluating smoke effects of different fuel treatment alterna-
tives. Although important to evaluating fuel treatments, smoke prediction methods
remain limited in coverage and scope. The full effects of wildfire and prescribed
burning on air quality are not entirely known (Sandberg and others 2002) and the

socioeconomic costs of smoke largely remain unexamined (Hesseln 2000: 324).

Zit

RESEARCH NOTE PNW-RN-542

28

Recreation Effects

Evaluating the recreation effects from wildfire and fuel treatments requires evaluat-
ing changes in both visitation rates and values visitors hold for different recreation
activities at different sites (for example, Vaux and others 1984). Resulting welfare
effects depend on initial site quality and the potential impacts of any wildfires on
site conditions (Englin and others 2001). How wildfire and treatments affect recre-
ation will differ by activity, location, forest conditions, and fire characteristics and
timing. Fuel treatments intended to reduce wildfires may not always be beneficial to
recreation, because the direct and lasting impacts of wildfire on recreation are not
always negative. Some recreation activities can be enhanced by wildfire, including
even high-intensity crown fires. For example, particular crown fires have been found
to benefit hiking while reducing mountain biking (Loomis and others 2001: 521).

Evaluating recreation impacts also can be complicated by time effects. Although
wildfire impacts on recreation generally fade over time (Englin and others 1996:
454), they can increase or decrease visitation and values in response to changing
forest conditions during postfire forest recovery, providing a range of benefits and
losses in the years following a fire (Englin and others 2001: 1837). For example,
recreation may be curtailed immediately following wildfire by damage to access
and facility infrastructure, but opportunities to view a wildfire’s aftermath as well
as the resulting forest recovery processes may attract numbers of recreationists
exceeding prefire visitation rates (Englin and others 2001, Loomis and others 2001).
Some crown fires have been found to increase hiking visitation and values owing
to the profusion of wildflowers and other novel ecological effects that often follow
wildfires (Englin and others 2001: 1843; Loomis and others 2001: 520). In fact, the
potential for increased recreation visitation following wildfire has been noted for the
opportunity it provides to educate visitors to national forests, parks, and forest lands
about fire ecology and the role of wildfire on forest landscapes (Englin and others
2001: 1843).

Specific recreation uses and values are relatively well documented for specific
locations (for example, Bergstrom and Cordell 1991, Loomis and others 1986,
McCollum and others 1990, Sorg and Loomis 1984, USDA Forest Service 1990).
However, only a few studies have examined wildfire effects on recreation uses
and values (Englin and others 1996, 2001; Hesseln and others 2003; Loomis and
others 2001). Virtually no studies exist describing recreation visitors’ reactions to
prescribed fires (Englin and others 2001: 1837; Loomis and others 1999: 200) or
other fuel treatments intended to reduce the likelihood of high-intensity crown fires.
Although fire managers can transfer existing information describing recreation

values to particular regions of interest (Rosenberger and Loomis 2001), they may

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

have little empirical basis for describing how recreation uses are affected by
wildfire and treatments (Loomis and Gonzalez-Caban 1997, Loomis and others
1999). What little information does exist often does not describe welfare changes
associated with specific recreation activities or may not be transferable to locations
outside specific study areas (see for example, Englin and others 2001: 1843).
Beyond general conclusions gleaned from existing recreation research, evaluating
the recreation effects of fuel treatments in specific locations likely would require

original studies.

Evaluating Ecological and Other Effects

Fire decisionmaking must incorporate a broad range of forest benefits including
biodiversity preservation and ecosystem values (Loomis and Gonzalez-Caban 1997:
473). Two types of information are needed to quantify the value of such changes: (1)
information describing changes in forest output levels (or resource effects) resulting
under alternative fuel treatment scenarios and (2) information describing people’s
values for those forest output levels (or resource effects). Characterizing ecological
effects and their values remains among the more significant analytical challenges in
evaluating fuel treatments. Several studies have examined wildfire effects on a vari-
ety of ecological resources of interest; however, few studies are designed to exam-
ine these effects separable from other effects related to site characteristics, weather,
and other factors (Rideout and others 1999b: 50-51). General relationships between
wildfire behavior and wildfire effects often are not well known, because individual
studies tend to focus on natural resource impacts of specific fires or describe fire
characteristics only in general or qualitative terms. Studies of wildfire effects do not
often encompass potential fuel treatment effects. Moreover, wildfire and fuel treat-
ment effects can differ depending on existing conditions, as well as by the nature of
the direct and indirect impacts of wildfires and fuel treatments on those conditions.
For wildlife, although the immediate wildfire effects often include injury, death,
and migration, resulting habitat changes generally are most significant (Smith
2000: iv) and can affect wildlife at species, population, and community levels.
Stand-replacing wildfires roll back forest succession processes with corresponding
changes to forest composition and structure (Rochelle 2002, Smith 2000). Wildfire
effects on individual species can be beneficial, harmful, or negligible, depending
on the species, stage of stand development, and the sizes, severity, and patterns of
wildfires, among other factors. Many species have adapted to historical wildfire
regimes over long periods of time. Although wildlife impacts of fuel treatments are
less known than those of wildfire, research suggests that thinning and prescribed

burning pose relatively modest risks if key habitat structures and conditions can

29

RESEARCH NOTE PNW-RN-542

30

be maintained (Rochelle 2002: 45). Where long-term fire suppression has notably
altered species composition and increased fuel loads, wildfires are unlikely to result
in presettlement vegetation and habitat characteristics without some type of prior
fuel treatment to lessen wildfire severity (Lyon and Smith 2000: 59-60). Select-
ing what fuel treatments are appropriate in different locations depends on existing
forest conditions and wildfire threat. Prescribed fire may be preferred over thinning
or other mechanical treatments if fire would provide ecological or other benefits;
mechanical treatments might be preferred in areas expected to benefit little from
fire (Miller and others 2000).

For aquatic and riparian species in the short term, heat and fire and resulting
debris flows can kill fish and other species and damage habitat. Over the long term,
debris flows can create and maintain functioning habitat (for example, Miller and
others 2003), including beneficial river landforms such as fans, flood plains, ter-
races, and side channels (Benda and others 2003: 114). Wildfire effects in otherwise
intact unfragmented stream ecosystems are not always catastrophic nor are recov-
ery periods excessively long, even where wildfire suppression has occurred for long
periods (Minshall 2003: 158-159). Erosion, sedimentation, smoke, and ash-fall can
provide important nutrients to riparian systems, stimulating phytoplankton growth
well beyond the immediate burned area (Spencer and others 2003). Down woody
debris generated by wildfire can benefit aquatic habitat if aquatic species that
require such debris are present and the system lacks woody debris. There can be
exceptions, such as when postfire flooding scours streambeds where little coarse
wood is available to replace that removed. Reducing large wildfires by using fuel
treatments can be beneficial, particularly to isolated, small, or otherwise vulnerable
aquatic populations that face possible extinction from severe fire (Dunham and
others 2003: 192). Despite high values associated with riparian areas and recogni-
tion of wildfire as an important natural disturbance, few studies have examined
the behavior, properties, and influence of wildfire in riparian areas (Dwire and
Kauffman 2003: 61). Fuel treatments likely are beneficial in some contexts but
not others (Rieman and others 2003: 198).

Related to aquatic and riparian effects are sedimentation effects. Landslides
and debris flows are important storm-driven processes of sediment delivery to
stream channels in many landscapes (Miller and others 2003: 122—123). Their tim-
ing and severity can be greatly influenced by wildfires that destroy ground cover,
kill vegetation, and reduce soil infiltration, with severe fires increasing their fre-
quency and magnitude (Wondzell and King 2003: 79). However, little data exist
with which to characterize wildfire effects on the frequency and magnitude of

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

erosion and sedimentation processes (Miller and others 2003: 123) and their ef-
fects on stream ecology (Wondzell and King 2003: 84). Erosion and sedimentation
impacts on stream channels likely vary, influencing stream ecological functions in

different ways. However, because disturbance processes such as wildfires, floods,

erosion, and sedimentation generally are viewed as important sources of physical er
S y P Pay Characterizing

heterogeneity and biological diversity in river systems, such processes are consid- ?
8 y s y y P ecological effects

ered positive events that promote long-term ecological function (Benda and others :
and their values

2003: 117). Such effects, however, must be weighed against other potential adverse :
remains among the

socioeconomic consequences downstream, which may include downstream sedi- aes
more significant

mentation of surface water bodies including reservoirs and boat channels (for ex- :
analytical challenges

ample, Loomis 2003, Wohlgemuth and others 1999) and increased water treatment ; :
in evaluating fuel

costs associated with reduced water quality (for example, Fitzgerald 2002). enters
In summary, whether fuel treatments are beneficial in terms of biodiversity

preservation and ecosystem values greatly depends on given circumstances. Little

or no generalizable information exists with which to evaluate changes in ecosystem

functions or outputs resulting from fuel treatments over time. This general lack of

output measures makes evaluating ecosystem effects within an economic analytical

framework quite difficult.

Valuing Ecological and Other Effects

Although published values can be found for a variety of forest benefits, few stud-
ies have documented the impacts of wildfires and fuel treatments on such values
(Loomis and others 1999: 199). With the exception of commercially sold forest
products, such as timber, most forest benefits involve nonmarket values, which
generally can be estimated by economists using a variety of techniques. The
relevant value measurement for evaluating wildfire or fuel treatment effects is the
value associated with the marginal change in ecological output induced by fire or
treatment (for example, Althaus and Mills 1982: 6). Values for nonmarket ouputs,
however, can be difficult to assess on broad scales because of the wide range of out-
puts (Hesseln 2000). Also, the marginal benefits of some outputs—the incremental
increase in benefit given an incremental increase in output—may be impractical or
too costly to accurately estimate (Rideout 2003). Values for cultural resources and
ecosystem functions also may include significant existence, option, bequest, and
other intrinsic values, making them particularly difficult to quantify and incorpo-
rate into fire management and policy (Hesseln and Rideout 1999: 182).

Studies that have examined changes in forest benefits resulting from wildfire
and fuel treatments generally have focused on relatively well-defined resource out-
puts—northern spotted owls (Strix occidentalis caurina) or big game habitat

31

RESEARCH NOTE PNW-RN-542

32

(Loomis and Gonzalez-Caban 1997), for example, or specific geographic areas.
Whether information is available for specific locations often will determine how
comprehensive any evaluation of forest benefits can be. Values estimated for par-
ticular ecological effects in one location sometimes can be transferred to other
locations by using benefit transfer techniques, but these depend on meeting a num-
ber of data, site, and study criteria (Desvousges and others 1992, Rosenberger and
Loomis 2001), which may not be possible. For these reasons, often only a partial ac-
counting of potential forest benefit changes likely to result from wildfires and fuel
treatments is possible. Partial evaluations of benefits, however, can present prob-
lems if they lead to biased results favoring one action over another. For example,
studies show considerable willingness to pay among the public for fire protection
activities that reduce the number and extent of wildfires in old-growth northern
spotted owl habitat (Loomis and Gonzalez-Caban 1997, Loomis and others 1996).
These studies would seem to support increased funding for related fire management
activities. However, a different conclusion might result if information on values de-
rived from early-succession forest conditions and habitat were also included, which
might partially offset old-growth values. Comprehensive evaluation of costs and
benefits may be impractical in many cases. Analysts will need to carefully consider

the potential management and policy implications of missing information.

Is Current Knowledge Sufficient?

This section has briefly described what is known about just some of the potential
costs and benefits of conducting fuel treatments. Not addressed are potential fuel
treatment effects on wildfire suppression and postfire restoration costs, grazing,
scenery and aesthetics, carbon sequestration, and air quality benefits, among others.
With sufficient funding and time, useful information regarding changes in forest
benefit outputs and values generally could be obtained by using existing economics
methods. However, the general lack of information describing the long-term effects
of wildfire and fuel treatments on forest conditions and related resource effects is a
significant obstacle to comprehensive, or in some cases, even partial analyses. The
current availability of information differs by region, with more information avail-
able for places where ongoing research is already underway.

Fuel management intended to preserve, maintain, and restore ecosystems
inevitably is conducted in the context of scarce resources—we can never have
everything we would like (Rideout 2003). Current information describing the
resource effects and resulting changes in forest benefits arising from wildfires
and fuel treatments is not sufficient to support comprehensive analysis of the costs

and benefits of alternative fuel treatment scenarios. Lacking such information,

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

managers and policymakers may be unable to implement cost-effective fire
management programs based on sound economic principles. Specific needs
include (1) better information about fire management activities and fire effects;

(2) long-term effects of fire management activities on expected suppression costs,
resource and property damage, and market and nonmarket benefits; and (3) greater
incorporation of nontimber market and nonmarket benefits into risk research
(Hesseln 2000: 332-333). All of these factors must be examined in a fire policy
context that is conducive to achieving economically efficient outcomes, which

may not always necessarily be the sole objective of federal forest management.

Management, Policy, and Research Implications

The costs and benefits of fuel treatments should be considered over the long term
and within an analytical context that includes other management actions, most no-
tably wildfire suppression and postfire restoration, that also affect forest conditions
and the wildfire regime. All of today’s management actions and the wildfires that
burn, will affect forest conditions and the necessity for fuel treatments tomorrow,

as well as the likelihood, severity, and intensity of tomorrow’s wildfires and their
associated suppression and postfire restoration costs. How forest conditions change
over time as a result of fuel treatments and wildfires will determine the levels of
forest benefits received in future years. All of these costs and benefits, now and in
the future, must be discounted to the present. Clearly, the information and analytical
needs for conducting rigorous comprehensive analyses of the costs and benefits of
fuel treatments are significant. The complexity of the fuel treatment issue is a major
factor contributing to uncertainty and ultimately driving persistent debate about the
wisdom of investing in fuel treatments in the Nation’s forests. Sometimes wildfires
result in net benefits; sometimes they result in net costs. The net benefits of conduct-
ing fuel treatments are not always certain.

There are not likely to be sufficient data and information with which to conduct
comprehensive evaluation of fuel treatments for the foreseeable future. In the near
term, any economic rationale for conducting fuel treatments offered from a national
perspective likely will derive more from qualitative than from quantitative analyses.
Forest scientists generally agree that wildfire historically has been an important
process of forest landscape change in the United States and should be restored to its
appropriate role in federal forest management. Where there may be less agreement
is in defining the best way to do it. There appears to be some prevailing concern
among segments of the public that recent federal interest in conducting fuel treat-
ments is motivated more by an interest in logging than in fuel reduction (see for
example, Allen 2003, Bumiller 2003, Nash 2003, among others). This perception

The complexity of

the fuel treatment
issue is a major

factor contributing
uncertainty and driving
persistent debate
about the wisdom

of investing in fuel
treatments in the

Nation’s forests.

33

RESEARCH NOTE PNW-RN-542

34

is one obstacle to reformulating federal forest policy and management to more
adequately address wildfire. Given public unease with wildfire, difficulties also
may exist in advocating the need for fuel treatments—prescribed burning in par-
ticular—by focusing on the potential catastrophic effects of wildfire on communi-
ties located on fire-prone forest landscapes. Effectively addressing the wildfire issue
will depend on dialogue among the public, policymakers, managers, and scientists
about the costs and benefits of alternative fuel treatment scenarios, including inac-
tion, and existing uncertainties regarding fuel treatment effects.

If the public desires to maintain forest landscapes within a historical range of
conditions, better incorporating wild and prescribed fire into forest management
is a necessary step, including defining where and when to suppress wildfires or let
them burn. Public support for burning tends to be positively correlated with public
knowledge about fire and fire policy (Beebe and Omi 1993, Manfredo and others
1990). Traditional fire prevention campaigns have not recognized the beneficial role
of fire in the environment (USDI and USDA 1995). Given the long-running and
effective federal campaign to educate the public about the need to prevent forest
fires, pursuing an elevated fire role in federal forest policy and management likely
will require reeducating the public about the appropriate function of fire processes
in forest landscapes. What may be as useful as improved data and analyses of fuel
treatments, is a new federal public education campaign highlighting the historical
role of fire in landscape change and ecosystem function, as well as the role of natu-
ral and management-ignited prescribed fire, thinning, and harvesting in a compre-
hensive and effective forest management strategy that fairly incorporates the full
range of benefits the public desire from their forest lands.

Acknowledgments

Funding for this report was provided by the Pacific Northwest Research
Station’s Focused Science Delivery Program. I thank Ralph Alig, Jamie Barbour,
Geoff Donovan, Richard Haynes, Linda Langner, Claire Montgomery, Ken Skog,
Seth White, and Mark Wiitala for helpful comments.

Metric Equivalents

When you know: Multiply by: To find:
Acres 0.405 Hectares
Feet 0.305 Meters
Miles 1.609 Kilometers

Issues in Evaluating the Costs and Benefits of Fuel Treatments to Reduce Wildfire in the Nation’s Forests

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Appendix: Glossary of Descriptive Fire Terms
as Used in This Report

Fire suppression—The work of extinguishing or containing a fire, beginning
with its discovery, and including initial response, extended attack, and large

fire support (National Interagency Fire Center 2004a).

Fuel treatments—Actions, including manipulation, combustion, or removal of
fuel, intended to reduce the likelihood of ignition and/or lessen potential damage
and resistance to fire suppression (National Interagency Fire Center 2004a).

Intensity—The rate at which fires consume fuel (Russell and others 2004).

Likelihood—The probability that a wildfire will occur. Because many natural-
caused wildfires are small and tend to extinguish on their own, likelihood
generally is used in this report to describe the probability of extreme wildfire

events requiring significant suppression effort.

Postfire restoration—Actions, including emergency stabilization and
rehabilitation, intended to reduce or repair damage or disturbance caused

by wildland fires or fire suppression activities.
Scale—As used in this report, the size of a wildfire event in terms of acres burned.

Severity—tThe (presumably adverse) effects fire has on vegetation, soil, buildings,
watersheds, and other resource values (Russell and others 2004).

Wildfire regime—Definitions for the term “wildfire regime” or “fire regime”
differ slightly from source to source. The term “wildfire regime” frequently
is used to describe the patterns, sizes, uniformity, and severity of wildfires
(for example, Brown 2000, Parsons 2000). The report Federal Wildland Fire
Management: Policy and Program Review (USDI USDA 1995), which outlines
contemporary federal wildland fire policy, uses the term “fire regime” to
describe “circumstances of fires, including frequency, intensity, and spatial
extent.” For the purposes in this report, wildfire or fire regime means the
intensity, severity, and scale of wildfires that occur on a forest landscape,
as well as the likelihood of extreme wildfire events requiring significant

suppression effort.

~y U.S. GOVERNMENT PRINTING OFFICE: 2004 — 789-0906 / NNNN7 Region No. 10

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