Risky behaviour: Evidence from fire setting in Indonesia’s forests


Published 27.10.21

Firms overuse fires when risks are not internalised, but greater sanctions could significantly reduce forest fire spread

Read “The origins and control of forest fires in the tropics” by Clare Balboni, Robin Burgess, and Benjamin Olken here.

Fires are commonly used as a cheap and easy method of clearing land for productive use. However, the decision to use fire, and the acceptability of the risks involved, are highly dependent on whether any potential externalities are internalised to the user. In this VoxDevTalk, Benjamin Olken discusses his recent work with Clare Balboni and Robin Burgess in with they use satellite imagery data of Indonesia’s national forests over a 16-year period to track where fires are starting, by who, and the respective risk tolerance for those starting fires.

The authors show that local firms are much more cautious with fire setting when located near their own property, or protected or populated areas, and more risk tolerant in sparser or neighbouring areas. This tolerance to set fires on windy days where there is a chance of fire spread is calculated to cause 30% of the total area burned over the study period. If greater government sanctions were in place for fire starters, and if firms treated all land with the same caution as protected or populated areas, fire spread could be reduced by 80%.