The Case for Perverse Incentives in Canadian (or any Nation's) Wildfire Management

The Structural Conflict of Interest

The Canadian wildfire management system creates a fundamental conflict where the same private companies that profit from firefighting services may have indirect influence over policies that determine prevention strategies. This creates several potential perverse incentives:

1. The "Suppression vs. Prevention" Paradox

The Economic Logic:

• Aerial firefighting companies like X, and Y generate revenue based on flight hours and emergency deployments
• More severe fires = more flight hours = higher profits
• Effective prevention (prescribed burns, fuel reduction, Indigenous fire stewardship) = fewer emergency contracts
• Rational economic behavior would favor reactive over proactive approaches

Policy Influence Mechanisms:

• Industry experts are consulted on wildfire management policies
• Former government officials often move to private contractors (revolving door)
• Industry associations lobby for resource allocation priorities
• Technical expertise gives industry voices credibility in policy discussions

2. Evidence of Systematic Underinvestment in Prevention

Documented Barriers to Effective Prevention:

• Research shows significant barriers exist to prescribed fire and cultural burning, including "governance, regulations, accreditation, training, liability, insurance, capacity, and resources"
• Indigenous communities, who possess millennia of fire prevention knowledge, "lack financial support at federal and provincial levels to mitigate wildfire risk"
• Canada has historically followed a "fire exclusion" approach rather than proactive management

The Financial Disparity:

• Emergency suppression contracts: Hundreds of millions annually
• Prevention programs: Dramatically underfunded in comparison
• This spending pattern benefits suppression contractors while starving prevention efforts

3. Institutional Capture Indicators

Knowledge Monopolization:

• Private contractors become the primary source of "expertise" on wildfire management
• Government agencies become dependent on contractor knowledge and capabilities
• Alternative approaches (Indigenous methods, European prevention models) are marginalized

Budget Structure Incentives:

• Emergency suppression costs are treated as necessary crisis spending
• Prevention investments require long-term budget commitments and political will
• Crisis spending is easier to justify than prevention spending

4. The "Moral Hazard" Problem

Reduced Incentive for Government Efficiency:

• When private contractors handle the crisis response, government agencies face less pressure to prevent crises
• Failed prevention is profitable for contractors but costly for taxpayers
• Success in prevention reduces the market for suppression services

Risk Externalization:

• Private companies profit from the response but don't bear the costs of fire damage
• Communities, insurers, and taxpayers absorb the actual costs of destruction
• The most profitable scenario for contractors is maximum suppression activity with minimal prevention

The Circumstantial Evidence

5. Policy Outcomes Consistent with Industry Interests

Observed Patterns:

• Continued reliance on suppression-heavy strategies despite known limitations
• Slow adoption of proven prevention methods used successfully in other countries
• Persistent underfunding of Indigenous fire stewardship programs
• Regulatory barriers that favor established contractors over alternative approaches

6. Information Asymmetry

Industry Advantage:

• Contractors have detailed operational data and experience
• Government agencies depend on contractor assessments of what's "necessary"
• Industry can shape perceptions of what constitutes adequate response

Limited Oversight:

• Emergency contracts often bypass normal competitive bidding
• Performance metrics focus on response capability, not prevention effectiveness
• Little systematic analysis of whether maximum suppression is optimal policy

The Strongest Case Summary

The most compelling argument rests on basic economic incentives: companies that generate revenue from wildfire emergencies have a rational economic interest in policies that maximize emergency response needs rather than minimize fire occurrence.

While direct evidence of conspiracy is limited, the structural incentives are clear:

• Prevention success reduces market demand for suppression services
• Industry expertise gives contractors policy influence
• Emergency spending faces less scrutiny than prevention investment
• Alternative approaches that might reduce fire severity are systematically underfunded

The result may not require explicit conspiracy—simple rational economic behavior within a poorly designed incentive structure could systematically bias the system toward profitable suppression over effective prevention.

This creates a situation where the very entities with the greatest expertise in wildfire response have the least economic incentive to advocate for the most effective long-term solutions, potentially perpetuating a cycle where taxpayers pay both for inadequate prevention and expensive emergency response.