Good Fire, Bad Fire, Costly Fire: Moonlight Fire Claims

First, I have to say that some of my best friends are economists.
Second, like any scientists, economists disagree. So I’m not expecting that anyone has THE RIGHT WAY to calculate TRUE fire costs.

But we have brought up the costs of fires, plus and minus. As in, how do you balance restoration benefits, with sedimentation flooding and road and culvert repair, etc.

We could debate it all day; but these folks had to actually decide on values for this lawsuit. I’m assuming that in all these calculations there were some subtractions for resource benefits.

Here are Sierra Pacific’s q’s and a’s on the settlement on the Moonlight Fire.

Now lawyers are not economists, just like they aren’t wildlife biologists, so I’m not arguing that they have scientific insight. I’m just saying it’s an interesting approach they took. I realize that, in this case, this is Sierra Pacific’s side of the story. Note: I am open to posting the USG side of the story, I just couldn’t locate one on the internet.

Below is an excerpt:

Why did the Federal Government settle for $55 million plus 22,500 acres of land when it initially informed the parties that it was after nearly $800 million in damages, plus interest?
A: Sierra Pacific believes that its offer of high value environmental property which is difficult to use for timber land forced the government’s hand. For years, the US Attorney’s office
has been attempting to justify its effort to recover excessive damages by pointing to the value of various environmental concerns. Sierra Pacific’s settlement offer to provide the public with environmentally valuable land forced the US Attorney’s to either accept the land offer, or end up demonstrating that these cases are all about collecting excessive damages, as opposed to
protecting the environment. Thankfully, Sierra Pacific’s land holdings allowed it to force this election, but its ability to do that here is certainly no answer for the future, and it’s no answer for the large majority of California businesses and citizens who might find themselves facing the threat of such absurd damage claims in the future.
It’s also important to understand that the pre-fire fair market value of the government’s land and timber affected by this fire was about $115 million dollars. After the fire, government’s land
had a market value of about $96 million, meaning that the fire reduced the value of the property by about $19 million. The government claimed damages of nearly 40 times the diminution in
value of its land and nearly 8 times the pre-fire market value of its land. The federal government argued that it could recover damages far in excess of the fair market value because the land is
owned by government rather than a private party. However, Sierra Pacific has sold and traded land with the federal government based on fair market value for decades. It is only after the U.S.
attorney gets in the business of assessing fire damage that the actual damages (well under $100 million) climb to nearly $800 million.

Sierra Pacific also raised this issue:

Sierra Pacific chose to resolve this case because federal court Judge Mueller ruled on a motion in limine that the defendants could be liable for the government’s damages without having caused the fire. Any ruling that property owners and timber companies are essentially strictly liable for fires that start on their watch – regardless of whether those fires are caused by arson, hunters, or hikers – would have a chilling effect on private landowners’ willingness to allow the members of the public to use nearly 8 million acres of privately owned timberland in California.

I would be interested in “the other side” of this..because it sounds odd the way it was expressed here.

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