Please help with this homework question which is about the 2018 wildfire. Thank you in advance!!
A deadly wildfire in November 2018, named the Camp Fire, caused many deaths, destroyed thousands of structures, and burned 150,000 acres. The fire led to a tragic loss of life, as well as the near entire destruction of two communities, Paradise and Concow.
The utility PG&E was deemed to have responsibility for the ignition of the fire. This means that those damaged by the fire have a legal claim to compensation from PG&E. (The size of potential liabilities from this and other wildfires pushed the utility into bankruptcy.)
To assess the size of such compensation payments, as well as other penalties that might be assessed by government agencies, courts need to decide on the value of the damages caused.
This exercise asks you to contemplate the valuation techniques discussed in our course with respect to this case.
The most dramatic and tragic aspect of the fire was the loss of human life. In class we discussed using the Value of a Statistical Life to put a dollar value on risks to human life. The federal EPA has a suggested estimate of the VSL here that it recommends agencies use in valuation. https://www.epa.gov/environmental-economics/mortality-risk-valuation
a. Find the EPA’s preferred estimate of the VSL; find the number of deaths reported as directly caused by the Camp Fire; and use those numbers to calculate an estimate of the value of lost life from the Camp Fire. Show your calculation. (There may be some ambiguity about specific values, so we will award full score to things that are in a reasonable range.)
b.Is this a good estimate of the cost to society from lives lost during the Camp Fire incident? Explain why or why not. (For example, you may wish to argue that the VSL is not the right concept. Or, you may wish to recommend tweaks to the EPA’s number. Or, you may wish to argue that this is exactly the relevant number.)