As wildfires increasingly threaten individuals and structures, both safety concerns and economic concerns are rising in fast-developing fire-prone areas. Given the connection between wildfire damage and residential development in high-risk zones, it is essential to understand individuals’ awareness of wildfire risks and whether home prices reflect such risks. This study investigates the impact of wildfire hazard disclosure during property transactions on property prices, focusing on homes near the boundaries of the Very High Fire Hazard Severity Zones in southern California's Local Responsibility Areas. Utilizing CoreLogic home sales data and a geographical difference-in-discontinuities approach, this study analyzes transactions before and after the adoption period of fire hazard maps. Results indicate no significant local average treatment effects from disclosing wildfire hazards on home prices, suggesting that the current disclosure laws are ineffective in increasing risk salience. This study contributes to the literature on the effect of policy-based information treatments in a wildfire hazard context.
Sizhuo Chen is a fifth-year Ph.D. candidate in Energy, Environmental, and Food Economics at Pennsylvania State University. Her research in environmental economics focuses on natural hazard adaptation and resilience from a socio-economic perspective, with a particular emphasis on wildfire hazards, land development, and the housing market in the western United States. Prior to her doctoral studies at Penn State, she earned a Master’s degree in Economics from the University of Wisconsin-Madison, following her undergraduate experience at the Chinese University of Hong Kong (Shen Zhen), China.