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Wildfire Prevention Possibilities

EconEye Admin

Climate change has made wildfires larger, more frequent, and more difficult to extinguish. California’s devastating wildfires in 2020 and 2021 convinced the state’s lawmakers to increase the budget for wildfire prevention services.

In this post, we look at the economic problem faced by California lawmakers arising from wildfires and climate change using a production possibilities frontier.

What is a production possibilities frontier (PPF)?

A production possibilities frontier (PPF) is a boundary between those combinations of goods and services that can be produced and those combinations that cannot. To illustrate a PPF, we focus on the quantities produced of two goods and services.

How does California’s PPF illustrate the economic problem faced by the state’s lawmakers arising from wildfires?

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What is the cost of increasing the budget for wildfire prevention services?

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How does California’s PPF illustrate the effects of climate change on wildfire prevention services?

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Work these questions to check your understanding and get instant feedback.

Answer the following questions to check your understanding of the story.

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How does saving more land with wildfire prevention affect the production of other goods and services and the opportunity cost of saving land?
As the amount of land saved by wildfire prevention increases, the production of other goods and services _____________ and the opportunity cost of saving land _____________.

As more land is saved, more resources are required to save an additional 1 million acres. How does the opportunity cost of saving land change?

California faces a tradeoff between saving land and producing other goods and services.

If the opportunity cost of saving land increases, is California sacrificing more or fewer other goods and services?

Saving more land decreases the production of other goods and services and increases the opportunity cost of saving land.

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Consider a PPF with land saved from wildfire prevention on the x-axis and other goods and services on the y-axis, as shown throughout this post. How does the PPF illustrate the effect of climate change on wildfire prevention?

Climate change does not expand production possibilities, so the PPF does not rotate outward.

We move along the PPF when we make a decision holding production possibilities fixed, but climate change affects production possibilities.

Because climate change limits production possibilities, the PPF rotates inward.

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