Wednesday, February 22, 2012

Hramblings: Rural fire protection, civility, community and tragedy of the commons **UPDATES**

The web has been buzzing over a story about a man in Obion County whose house was allowed to burn to the ground due to not paying a $75 fee to the city of South Fulton, TN. Several bloggers have suggested that this highlights the difference between liberal and conservative notions of governance.

I disagree. This is an example of the problem of funding all sorts of services during a time when citizens are unwilling to pay for them (particularly for anyone else) and trying to counterbalance an inexplicable affection for mindless zero-tolerance policies with forbearance and mercy. Our sense of fair play is showing some wear.

First there is the false assumption that every place in the country is (and should be) served by a full-time fire department. Second, that fire service is (and should be) funded through taxes (or staffed by volunteers) as a public good. Finally how to deal with people that are unwilling (not unable) to pay for services they consume. The latter being an example of the free-rider problem that Nicholas Christakis describes in "Connected". The history of full-time fire service and how it evolved from the fire insurance business is covered by NPR.

In the county of Washtenaw, three cities have a mutual aid agreement. Several suburban cities have full-time fire departments, but have opted out of the agreement. Some townships pay a nearby city for support, for example Lodi Township gets fire service from Saline. At least in our county the coverage does not include areas where residents directly pay a fire department.

A problem with a user fee is that people are not very good at estimated risk. Some people will use the money saved to provide for their safety in another way. Another option is to pool labor with your neighbors.

Economically, pricing a user fee is tough because you want it to be low enough to encourage participation, but high enough to cover your costs. The free-rider problem says, if you are willing to put out a fire for someone who hasn't paid the fee, you can teach others that its ok to not pay up. Note that at least in the South Fulton arrangement, paying the fee doesn't guarantee fire service.

Another problem with a fixed fee is it assumes that all fires cost the same to put out. $75 might be a lot for someone on a low or fixed income. Similarly, you're paying $75 regardless of whether your house is a 12x60 mobile home or a 4500 sq ft McMansion. To account for this, some user fees are based on square footage of the property to be protected.

The downside of all this is it puts people who are duty-bound to save lives and property in a position where they can't act. It also contributes to a general coarsening of society and growing incivility. One mitigation is that the homeowner had paid the fee in previous years, so you could make an argument for good faith. One blogger suggests a penalty fee to address people that think it won't happen to them. I don't know whether you could come up with a penalty that could be justified and still avoid free riders but I suspect it wouldn't require rendering people homeless. The TakeAway suggests that it costs an average of $4500 to fight a home fire. Other cities that have a similar arrangement charge non-payers based on number of trucks and time on scene. You'd think that a city that was having trouble balancing the budget would be willing to contract out their firefighters on a time and materials basis. Back a few years, Obion County charged $500 a call for rural fires, but collection was only 50%. This would seem to be a market failure.

Another assumption is that fires will eventually go out and won't present a general risk. Not true for arid areas of the country.

We don't know how many fires occur in Obion County, how many people pay the fee and whether the current fee structure allows for some leniency. We also don't know what services the county residents get for the taxes they are paying, i.e. for lack of $75 the county loses tax revenue due to the loss in property value. What we do know is it failed ethically and from a market standpoint.

Update: The county fire department operates on a budget of $550,000. 85% of the calls are outside the city. The county tried to implement a fire plan that included a property tax increase. They also considered other options for rural fire protection.

Update: American Spectator weighs in (NB: pun quotient is high).

Update: National Review even finds this on shaky grounds.

Update: Added the perspective of one rural volunteer firefighter who writes of the squeeze between declining people and increases in training and equipment requirements. Apparently, those pancake breakfasts and raffles are still important.

Update: Some folks refer to the fee as insurance. Insurance is protection against a financial loss. You pay the premium and meet the requirements of the policy, they reimburse you.
Fire service fees and volunteer firefighting companies are a cooperative. You contribute to purchase/maintain buildings/equipment and provide training. If you pay the fee (or perhaps contribute labor) you get service free or at a reduced rate. One eliminates or reduces the financial loss. The other eliminates or reduces the personal and property loss. Although a few news sources suggest that fire insurance companies used to provide funding and equipment to fire stations.

Update: Another blogger points out that there are no hydrants at rural addresses. You need to carry water to the site and best guess, you have 12 minutes of water available.

Update: Wheakley County, TN states their policy. Has similar issues.

Update: The home was insured. There is also a collection being taken up for the family.
PAYPAL Address is CranickFireFund@Yahoo.Com
Street address: Gene or Mildred Paulette Cranick c/o Heritage Bank PO Box 1410 Fulton KY 42041
Update: Similar situation in Britain.

Update: Another house burns down while firefighters watch.

Update: Looks like the political and karmic damage has taken its toll. There is now an option to pay $3500 on the spot if you skip the fee.


At 7:47 AM, Blogger Natalie Smith said...

Your blog post is really useful. Happy Thanksgiving day from Hotel Charles de Gaulle.

At 11:38 AM, Blogger Steve Simmons said...

Nicely written up, John. I notice that in the second case involving the same fire department, there was noticeably less outrage. Even the folks whose house burned down said they consciously decided not to buy coverage: "[they] said they were aware of the policy, but thought a fire would never happen to them."

The lack of outrage IMHO reflects a greater understanding of what happens when you have opt-in/opt-out services and the outs suddenly need the service.

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