The economic logic of prescribed burning law and regulation

Prescribed burning has long been recognized as a useful tool in rangeland management, but with it comes the risk of fire and smoke damage to the property of others. All but 2 states have codified laws specifying criminal penalties or liability rules for prescribed burning, but the laws in a number of states have changed in recent years or are under review. We develop an economic model of the incentive and welfare effects of prescribed burning law and regulation in which the likelihood and extent of external damage can be reduced by precautionary effort on the part of both the burner and/or the victim. The model provides implications regarding the comparative advantages to the public of strict liability versus negligence rules. We conclude that the relative effectiveness of a liability rule depends in large part on the relative ability of burners and other landowners to mitigate the probability and extent of damage, as well as the legal costs associated with implementing a given liability rule.