Do Timber Firms in the Oregon Public Timber Auctions Incorporate the Wildfire Risk into Their Bids?
Proposed Objectives of the Project:
This project’s attempted to investigate how the public timber auctions that are ran by the US Forest Service, Bureau of Land management and State governments are being impacted by the increasing wildfire risk driven by climate change. The goal of the second-year paper that spawned from the data the grant was used to purchase was to use the auction bids and revenues to estimate a novel wildfire risk cost estimate.

The current state of the economics of wildfire has used home prices/values and recreation prices to estimate the costs of wildfire. The literature has very little estimates of costs and damages from the industries and firms that face this risk. The project aimed to fill this gap.

Summary of Results:
The results from the analysis of the auction data show little to no response to auction bids to various wildfire risk measures. It is important to note there are multiple possibilities for the lack of results.

First, the state of high-quality wildfire risk data is sparse. Quantifying wildfire probability is a difficult task and the data products available to the public to not provide the best temporal or spatial variation needed to relate wildfire risk to firm’s auction behavior.

Second, the current state of the analysis has only studied the extensive margin of this market. That is, the analysis observes only the firms that have chosen to enter the auction. It may well be the case that wildfire risk’s major impact on this market is shifting entry decisions of firms. Conditional of entering, the firms have already calibrated their best responses in the markets and so regression on bids would find no effect.

Third, another avenue of selection is that the government agencies maybe selecting out the high-risk stands for auction. Thereby removing the impact on wildfire risk on bids.

The current state of the project’s analysis is to move the focus away from bids and focus on this extensive margin behavior in the market. Additionally, the study has ignored the Mills and contract execution by the firms who one the auction.