Rating a Wildfire Mitigation Strategy with an Insurance Premium: A Boreal Forest Case Study

Abstract

Risk analysis entails the systematic use of historical information to determine the frequency, magnitude and effects of unexpected events. Wildfire in boreal North America is a key driver of forest dynamics and may cause very significant economic losses. An actuarial approach to risk analysis based on cumulative probability distributions was developed to reduce the adverse effects of wildfire. To this effect, we developed spatially explicit landscape models to simulate the interactions between harvest, fire and forest succession over time in a boreal forest of eastern Canada. We estimated the amount of reduction of timber harvest necessary to build a buffer stock of sufficient size to cover fire losses and compared it to an insurance premium estimated in units of timber volume from the probability of occurrence and the amount of damage. Overall, the timber harvest reduction we applied was much more costly than the insurance premium even with a zero interest rate. This is due to the fact that the insurance premium is directly related to risk while the timber harvest reduction is not and, as a consequence, is much less efficient. These results, especially the comparison with a standard indicator such as an insurance premium, have useful implications at the time of choosing a mitigation strategy to protect timber supplies against risk without overly diminishing the provision of services from the forest. They are also promoting the use of insurance against disastrous events in forest management planning.

Mitigating post-fire regeneration failure in boreal landscapes with reforestation and variable retention harvesting: At what cost?

“…Conversely, the long-term financial impact of avoiding intervention altogether represents a potentially significant loss in productive areas and associated timber volume over time (Acuna et al 2010;Splawinski et al 2019aSplawinski et al , 2019b. Finally, the prevailing disturbance regime and any anticipated changes must be carefully considered when selecting silvicultural practices to include as part of a long-term adaptive management strategy, since the potential of losing investments to fire is more probable under shorter fire-cycles (Raulier et al 2013;Rodriguez-Baca et al 2016;Rijal et al 2018).…”

Long-Term Impacts of Forest Management Practices under Climate Change on Structure, Composition, and Fragmentation of the Canadian Boreal Landscape

“…These alternatives must aim to maintain both the preindustrial forest characteristics of composition and age class distribution and a coniferous forest cover [92,93]. Additionally, because of the economic impacts of such alternatives, improved solutions must integrate fire risk into the timber supply within a decision support framework [29].…”

“…Forestry intensification (i.e., short rotation and increasing harvest rate) has been proposed often as a possible solution to reduce carbon emissions into the atmosphere [26,27] and minimize the risks related to an enhanced fire regime [28,29]. However, depending on forest conditions, there is considerable uncertainty associated with the effectiveness of such a strategy to prepare forests for climate change [30,31].…”