Files
Abstract
In the US forestry industry, wildfire has always been one of the leading causes of damage. This
topic is of growing interest as wildfire has caused huge losses in recent years. Among all causes, lightning has always been the leading hazard. Unlike human related wildfires for which timber owners may be able to trace the responsible persons to claim losses, forestland owners essentially have no means to recover their losses against lightning-induced wildfire. In light of the fact that there are very few risk management instruments available to compensate timber losses.
Following this line of inquiry, our paper studies risks of lightning induced wildfire, conditioning
on crucial informational variables, across both spatial units and time periods. A non-parametric
bootstrapping method is used to quantify the risks. Some relevant observable variables, such
as environment and climate factors, are found to be statistically significant factors related to
wildfire risks. A group index insurance scheme has been proposed and its associated actuarially
fair premium rates have been estimated. Implications for wildfire management policies are also discussed.