Policy Memo: Reorganization of Federal Support Necessary for Proper Wildfire Mitigation

Memorandum To: Senator Richard Burr From: Olivia Stanley and Ned Morrissett Subject: Wildfire Disaster Planning and Management Reorganization of Federal Support Necessary for Proper Wildfire Mitigation An irresponsible camper leaves a fire unattended in a California forest. The wind picks up and suddenly that small camp fire becomes the tiny spark needed to set the dry western landscape ablaze. The fire rips through the forest and now residential communities are threaten by the fire’s path. The community is devastated by the disaster and needs financial aid for fire suppression followed by rebuilding, yet federal assistance is lacking. Since the early 1900s, American fire policy has been to protect natural resources and human communities from damages caused by wildfires. However, the consequences of this suppression policy have only strained available disaster funding and created conditions that increase the risk of future fires.^[1] The United States Department of Agriculture recently announced that wildfire suppression costs exceeded $2 billion in 2017, making it the most expensive year in history. Wildfire suppression accounted for 55% of the National Forest Service’s budget in 2017, compared to just 15% in the early 2000s.^[2] This reallocation of funds has forced the Forest Service to continuously borrow money from other areas of their budget that is intended for forest management, leaving little funding to perform controlled burns, precautionary harvesting, insect control, and other methods of fire prevention, thereby increasing the odds for future wildfires.^[3] In addition, federal funding for fires that originate on nonfederal land is often granted through the Stafford Act. However, FEMA’s database shows that there have only been 30 major fire disaster declarations in the last 60 years, a small subset of the 2,200 major disaster declarations during the same period.^[4] As a result, communities often go underfunded following an overwhelming fire episode. Continuous burning and the extension of the wildfire season due to human-induced climate change is driving up costs.^[5] Thus, an immediate revision to wildfire policy is necessary. As Davidson College students and residents of North Carolina, we have a particular interest in wildfire mitigation following the devastating fires that have swept across the western half of our state in recent years. We believe that a reorganization of federal funding and support with regards to wildfire mitigation is crucial to future disaster management plans. In this memo, we evaluate the current trends in wildfire mitigation and outline three additional strategies to encourage improved fire prevention and relief on both federal and nonfederal lands. Additionally, we employ a weighted decision analysis framework to analyze the effectiveness of each of our policy options. We find that the most desirable solution to the current ineffectiveness of wildfire relief would be to pass the Wildfire Mitigation Assistance Act (S.1932) and the Wildfire Disaster Funding Act (H.R.2862), both introduced in 2017. Four Strategies for Improving Wildfire Response Status Quo: Federal Funding Through the Stafford Act, Forest Service, and Department of the Interior Suppression efforts for fires that originate on federal lands including national parks and forests are currently funded through the budgets of the Forest Service (FS) and the Department of the Interior (DOI).^[6] Each agency receives annual discretionary appropriations and has two accounts for wildfire spending. The Wildland Fire Management Account receives the bulk of these appropriations and can be used for both preparedness and suppression. The Federal Land Assistance, Management, and Enhancement Act created a reserve fund for suppression. If both of these accounts are exhausted in a given year, the FS and DOI are authorized to transfer funds from other accounts to pay for suppression activities, an action know as “fire borrowing.” However, this results in underfunding for other crucial programs.^[7] Likewise, the Stafford Act authorizes the President to issue disaster, emergency and fire management declarations to enable federal funding for state and local governments dealing with fires originating on nonfederal land.^[8] Unfortunately, this legislation results in an emphasis on methods of suppression as opposed to prevention of wildfires because affected areas only receive funding after a fire has been declared a disaster. Wildfire Mitigation Assistance Act and Wildfire Disaster Funding Act There are currently two bills in Congress that would improve funding through the two processes described above. The Wildfire Mitigation Act was introduced in the Senate and would amend the Stafford Act to allow the President, whether or not a major disaster is declared, to provide hazard mitigation assistance to any area affected by a fire for which fire management assistance was provided under the Act.^[9] The Wildfire Disaster Funding Act was introduced in the House and would amend the Balanced Budget and Emergency Deficit Control Act of 1985 to require specific adjustments to discretionary spending limits to accommodate appropriations or wildfire suppression operations in the Wildland Fire Management Accounts of the DOI.^[10]  This would ultimately result in less “fire borrowing” and strain on other wildlife management programs. Using Private Markets to Finance Emergency Fire Fighting Expenditures Reallocating government funding into private capital markets presents an interesting solution to managing wildfires more efficiently. This solution would also provide stability and ensure funding for future wildfires. The private market would primarily be used in the form of catastrophe bonds which are government-issued bonds offered when fire damage reaches a predetermined threshold.^[11] These bonds essentially work by private investors, principally in the form of individuals or insurance companies, purchasing catastrophe bonds at a certain price, with the expectation that, if their funds are not needed, they will be paid back their principal value plus a certain interest rate.^[12] However, if there is an emergency where government funds are needed, the private capital will be used, creating an element of risk for a catastrophe bond investor.^[13] There are issues, however, in accessing private markets for previously federally funded activities, the primary issue being if bonds are issued at a particular threshold of acres burned, for example, there might be the possibility of overstating damages.^[14] This could potentially have negative environmental effects. Nonetheless, accessing the private market presents an attractive solution, and would undoubtedly increase wildfire funding, particularly for prevention methods. Restructuring of Forest Service and Interior Department Budgets The final solution is perhaps the most straightforward. Essentially, the Forest Service and Interior Department need more funding so that they are able to implement more proactive methods of fire prevention, instead of the reactive methods of fire suppression. Under the Stafford Act, many disasters are only given proper attention when the President determines them to be of extreme importance, and the bulk of federal money is then spent retroactively putting out the flames.^[15] If 55% of the Forest Service’s budget is going to be suppression, as we saw in 2017, we need to increase its funding so that more preventive methods can be implemented. The issue, of course, is determining where this funding will come from, and also determining where in the country the funding will be spent which raises questions of political feasibility. Strategy Analysis Based on Four Criteria The analytical framework we used focuses on four criteria for assessing these strategies. We analyzed the costs and benefits of the political, economic, social, and environmental components of each action. In our analysis, we weighted the political and economic categories as 0.2 and the social and environmental categories as 0.3 to add up to a full point. We will now go into detail about each criterion in order to explain how this framework informed our final policy suggestion. Political Feasibility- The status quo remains the most politically feasible option given the low level of action that and change that would be required at a federal level. However, we find the support of the two bills in Congress to be the most politically effective option as salience would likely be high because it does not require a tax increase or personal financial investment as our other options call for, yet it still addresses funding issues in affected areas. Economic Costs and Benefits- Considering both costs and benefits, supporting the two bills currently in Congress provides the most realistic economic benefit. Amending the Stafford Act requires essentially no funding and would allow for less borrowing. Systems involving private markets and complete budget reallocation, while providing much needed funding, could potentially be inefficient because there would be questions about how exactly the money should be spent. Social Costs and Benefits- The Wildfire Disaster Act and the Wildfire Mitigation Act would create the most social benefits as this solution would address management funding issues on both federal and nonfederal land. This option would aid remote and residential burns and protect recreational and domestic areas that support local economies and foster community. Environmental Costs and Benefits- A restructuring of Forest Service and Department of Interior budgets would contribute the most environmental benefits, as these two agencies fund burns on park and protected wildlife lands. This option would likely subsidize more well-rounded management and regrowth plans as well as the most effective prevention measures of any of the options outlined above. The Wildfire Mitigation Assistance Act and the Wildfire Disaster Funding Act are the Most Effective Strategies As demonstrated by our analysis above and the table found below, adjusting current federal wildfire funding procedures through the Wildfire Mitigation Assistance Act and the Wildfire Disaster Funding Act is the most favorable option for addressing wildfire prevention and relief across the country. This action would tackle budgetary allocation issues within the DOI and FS as well as provide a better opportunity for comprehensive aid to state and local governments through the Stafford Act.  Under the Wildfire Disaster Funding Act, the actual disaster response for catastrophe-level wildfire events would be issued from a different funding source than the bottom line FS and DOI budgets from which prevention and forest management projects are now funded. Additionally, through these amendments, post-disaster mitigation funding could be utilized for future fire prevention and forest health activities. Appendix Multi-Action Decision Analysis Table

	Political Costs and Benefits	Economic Costs and Benefits	Social Costs and Benefits	Environmental Costs and Benefits	Option Score	Weighted Option Score
Status Quo	3	1	1	1	1.5	1.4
Wildfire Mitigation Assistance Act & Wildfire Disaster Funding Act	2	3	2	2	2.25	2.2
Private Markets	1	2	2	2	1.75	1.8
Restructuring DOI and FS Budgets	1	2	2	3	2	2.1
Category Weight	0.2	0.2	0.3	0.3

*Please note this table is scaled on a rank of 1 to 3 with 1 being the least advantageous option and 3 being the most advantageous option.

1. Busenberg George, “Wildfire Management in the United States.” ↑
2. “Forest Service Wildland Fire Suppression Costs Exceed $2 Billion | USDA.” ↑
3. “Forest Service Wildland Fire Suppression Costs Exceed $2 Billion | USDA.” ↑
4. Hoover and Lindsay, “Wildfire Suppression Spending.” ↑
5. Butry et al., “What Is the Price of Catastrophic Wildfire?” ↑
6. Davis, “The West in Flames.” ↑
7. Hoover and Lindsay, “Wildfire Suppression Spending.” ↑
8. Bea, “Federal Stafford Act Disaster Assistance.” ↑
9. Bennet, “S.1932 – 115th Congress (2017-2018).” ↑
10. Simpson, “H.R.2862 – 115th Congress (2017-2018).” ↑
11. Hesseln, “Refinancing and Restructuring Federal Fire Management.” ↑
12. Cummins, CAT Bonds and Other Risk-Linked Securities. ↑
13. Cummins. ↑
14. Hesseln. ↑
15. Bea, “Federal Stafford Act Disaster Assistance.”

Works Cited Bea, Keith. “Federal Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding.” Library of Congress Washington DC Congressional Research Service, March 16, 2010. http://www.dtic.mil/docs/citations/ADA517329. Bennet, Michael. “S.1932 – 115th Congress (2017-2018): Wildfire Mitigation Assistance Act.” Webpage, October 5, 2017. https://www.congress.gov/bill/115th-congress/senate-bill/1932. Busenberg George. “Wildfire Management in the United States: The Evolution of a Policy Failure.” Review of Policy Research 21, no. 2 (February 12, 2004): 145–56. https://doi.org/10.1111/j.1541-1338.2004.00066.x. Butry, David T., D. Evan Mercer, Jeffrey P. Prestemon, John M. Pye, and Thomas P. Holmes. “What Is the Price of Catastrophic Wildfire?” Journal of Forestry; Bethesda 99, no. 11 (November 2001): 9. Cummins, J. David. “CAT Bonds and Other Risk-Linked Securities: State of the Market and Recent Developments,” 2007. Davis, Charles. “The West in Flames: The Intergovernmental Politics of Wildfire Suppression and Prevention.” Publius: The Journal of Federalism 31, no. 3 (January 1, 2001): 97–110. https://doi.org/10.1093/oxfordjournals.pubjof.a004911. “Forest Service Wildland Fire Suppression Costs Exceed $2 Billion | USDA.” Accessed March 25, 2018. https://www.usda.gov/media/press-releases/2017/09/14/forest-service-wildland-fire-suppression-costs-exceed-2-billion. Hesseln, Hayley. “Refinancing and Restructuring Federal Fire Management.” Journal of Forestry; Bethesda 99, no. 11 (November 2001): 4. Hoover, Katie, and Bruce R. Lindsay. “Wildfire Suppression Spending: Background, Issues, and Legislation in the 115th Congress.” Report. Digital Library, October 5, 2017. https://digital.library.unt.edu/ark:/67531/metadc1042221/. Simpson, Michael. “H.R.2862 – 115th Congress (2017-2018): Wildfire Disaster Funding Act.” Webpage, June 26, 2017. https://www.congress.gov/bill/115th-congress/house-bill/2862.