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Forests 2016, 7(5), 107; doi:10.3390/f7050107

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

1
Centre d’Étude de la Forêt, Faculté de foresterie, de géographie et de géomatique, Université Laval, 2405 rue de la Terrasse, Québec, QC G1V 0A6, Canada
2
Centre d’étude de la forêt, Université du Québec à Montréal, C. P. 8888, Succursale centre-ville, Montréal, QC H3C 3P8, Canada
*
Author to whom correspondence should be addressed.
Academic Editors: Yves Bergeron and Sylvie Gauthier
Received: 10 March 2016 / Revised: 28 April 2016 / Accepted: 10 May 2016 / Published: 13 May 2016
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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. View Full-Text
Keywords: planning; financial risk; fire; timber supply; sustainable forest management planning; financial risk; fire; timber supply; sustainable forest management
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Rodriguez-Baca, G.; Raulier, F.; Leduc, A. Rating a Wildfire Mitigation Strategy with an Insurance Premium: A Boreal Forest Case Study. Forests 2016, 7, 107.

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