Forest fires in southern Europe : an econometric investigation of the existence of economic incentives for fire arson

Devastating forest fires during the summer of 2007 resulted in an unprecedented level of destruction in the Mediterranean forests, prompting widespread speculation about profit- motivated arson as one of the principal causes of the fires. Forest protection laws essentially create a scarcity of land, making arson potentially profitable in several ways: the clearing of land for development and construction, expansion of farm size, and salvage logging (Economist 2007). This study seeks to evaluate the validity of these accusations by examining the relationship between land, wheat, and timber prices and incidence of forest fires in four countries: Spain, Greece, Italy, and Bulgaria. The fixed effects estimation yields mixed results, confirming the existence of a link between profit motives and forest fires, but failing to corroborate the arson allegations.