Wildfire risk, salience, and housing development in the wildland-urban interface

As wildfires increase in both severity and frequency, understanding the role of risk saliency on human behaviors in the face of fire risks becomes paramount. While research has shown that homebuyers capitalize wildfire risk following a fire, studies of the role that risk saliency plays on residential development is limited. This paper aims to fill this gap by studying the link between wildfire risk saliency and the rate of residential development in wildfire-prone areas, by treating recent wildfires as conditionally exogenous shocks to saliency. Using geospatial data on residential development in Colorado, we show that saliency shocks due to wildfire lead to statistically significant reductions in the rate of new development in wildfire risk zones that last upwards of 5 years, a result that is robust to a number of alternative explanations. We explore the policy implications of these findings, noting that education on fire risks may curtail some but not all of the development in these high wildfire-risk areas due to the rapid growth of development in these regions.