Risk Disclosure and Home Prices: Evidence from California Wildfire Hazard Zones Lala Ma, Margaret Walls, Matthew Wibbenmeyer, and Connor Lennon Working Paper 23-26 June 2023 About the Authors Lala Ma is an associate professor of economics in the Gatton College of Business and Economics at the University of Kentucky. She holds a B.A. and M.A. in Economics and a B.A. in Mathematics from Tufts University. She earned an M.A. and Ph.D. in Economics from Duke University in 2014 before joining the faculty at the University of Kentucky. Professor Ma is an environmental economist whose research focuses on estimating the values placed on environmental quality as assessed through housing markets and health impacts. Margaret Walls is a senior fellow and director of the Climate Risks and Resilience Program and the Environmental Justice Initiative at Resources for the Future. Her current research focuses on issues related to climate impacts and disasters, including wildfires and flooding, resilience and adaptation to extreme events, ecosystem services, and conservation. She previously served on the board of the Association of Environmental and Resource Economists and was an associate professor in the Department of Economics at Victoria University in Wellington, New Zealand, from 1996 through 2000. Matthew Wibbenmeyer is a fellow at RFF. His research seeks to understand climate impacts and climate mitigation policies related to the forest and land sectors, with a special focus on wildfire. His work frequently makes use of spatial data and interdisciplinary approaches and emphasizes behavioral factors and distributional implications of policy and management choices. Connor Lennon is a Data Scientist and Econometrics Consultant at Bayer. Graduating in 2022 from the University of Oregon with his PhD in Economics, his research often lies at the intersection of machine learning and causal inference. He seeks to understand how expansion of communities into new habitats, historic logging and past agricultural activity influence future climate mitigation strategies and costs around wildfire. Acknowledgments We thank Emily Joiner and Isabelle Rabideau for research assistance on this project. This research was supported by the USDA National Institute of Food and Agriculture’s Agriculture and Food Research Initiative Award No. 2021-67023-34483. Resources for the Future i About RFF Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy. Working papers are research materials circulated by their authors for purposes of information and discussion. They have not necessarily undergone formal peer review. The views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. Sharing Our Work Our work is available for sharing and adaptation under an Attribution-NonCommercialNoDerivatives 4.0 International (CC BY-NC-ND 4.0) license. You can copy and redistribute our material in any medium or format; you must give appropriate credit, provide a link to the license, and indicate if changes were made, and you may not apply additional restrictions. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. You may not use the material for commercial purposes. If you remix, transform, or build upon the material, you may not distribute the modified material. For more information, visit https://creativecommons.org/licenses/by-nc-nd/4.0/. Risk Disclosure and Home Prices: Evidence from California Wildfire Hazard Zones ii Abstract Damages from wildfires have increased dramatically in recent years. This study uses a boundary discontinuity design to estimate the effect of wildfire hazard disclosure on house prices. Using the universe of single-family sales transactions from the Zillow ZTRAX program in California from 2015 through 2022, we find that, on average, homes that faced disclosure requirements sold for approximately 4.3 percent less than nearby homes that did not. Price impacts are higher in recent years, following several damaging wildfires. Our findings highlight the use of disclosure re