Toward a Unified Economic Theory of Fire Program Analysis with Strategies for Empirical Modeling

Recent United States federal wildland fire policy documents including the 2001 policy update (US Department of Agriculture and US Department of the Interior 2001) call for integrated approaches to the national fire program. An important theme of these inter-agency policies is to encourage planning and budgeting across the major fire program components (e.g., suppression, fuels, prevention) in a consistent way. This means, for example, that planning and budgeting for the fuels (suppression) component is informed by the planning and budgeting of the suppression (fuels) component. In this chapter we specify the economic structure of a planning and budgeting system, as opposed to a component-by-component analysis. This structure shows, for example, that budgeting a federal system by program component is unlikely to promote efficiency. The structure also shows that the components can be managed in concert to capitalize on the complementary impacts they are likely to have on each other.

While previous conceptual models (such as the least cost plus loss or cost plus net value change) address the balance between damage (net value change) and fire program level (preparedness), this chapter addresses wildland fire management at the system level by specifying each program component as part of a unified system. For further development of current management approaches, see other chapters in section IV of this book. Section two provides critical background on the fire program components and the key ways that they interact. Section three develops the core analytics of the unified theory at the system level. This structure serves as a potential foundation for addressing the principles of management and budgeting of the fire program components within a cohesive and unified system. For example, we show how the productivity of the fuels component changes the productivity of the suppression component. This section concludes with an application of the envelope theorem revealing a potentially refutable proposition regarding program cost effectiveness. In the last section, we identify alternative modeling approaches. These approaches inform the balance between the advantages of the unified theory and the pragmatic concerns of viable modeling and implementation. Implementation of a truly unified approach is perhaps impractical, but development of the theory will identify important principles, conditions, and implications related to policy analysis, budgeting and program implementation. We start by establishing the structure of the key relationships between the program components.