Spatio-Temporal Modeling of Lightning Fires on Forestland: A Compensation Scheme

In the US forestry industry, wildre has always been one of the leading causes of damage. This topic is of growing interest as wildre has caused huge losses in recent years. Among all causes, lightning has always been the leading hazard. Unlike human related wildres for which timber owners may be able to trace the responsible persons to claim losses, forestland owners essentially have no means to recover their losses against lightning{induced wildre. In light of the fact that there are very few risk management instruments available to compensate timber losses. Following this line of inquiry, our paper studies risks of lightning induced wildre, conditioning on crucial informational variables, across both spatial units and time periods. A non{parametric bootstrapping method is used to quantify the risks. Some relevant observable variables, such as environment and climate factors, are found to be statistically signicant factors related to wildre risks. A group index insurance scheme has been proposed and its associated actuarially fair premium rates have been estimated. Implications for wildre management policies are also discussed.