Prediction markets are increasingly allowing users to place wagers on the behavior and impact of wildfires, a trend that climate scientists and forensic experts warn could incentivize arson and distort the public’s perception of natural disasters. While platforms like Polymarket describe these markets as tools for aggregating information, critics argue that monetizing extreme weather risks distancing individuals from the human suffering caused by property destruction and loss of life.
The Mechanics of Wildfire Betting
Prediction markets operate by allowing participants to buy shares in the outcome of specific events, usually framed as “yes” or “no” questions. According to Polymarket, users trade on future outcomes rather than gambling against a “house.” If a market suggests a 65% probability of a specific wildfire outcome, shares in that outcome are priced accordingly, with winners paid out at $1 per share. These platforms have expanded beyond financial or political forecasting to include environmental events, such as the number of acres burned or containment timelines for active fires.
Other platforms are also entering the space. A site called WyldFyre, which currently does not use any form of real-world currency, employs the marketing tagline: “You can’t predict fire. But you can trade on it.” Despite the lack of real-world financial stakes on some platforms, experts remain concerned about the broader societal signal sent by commodifying climate disasters.
Did you know?
Unlike hurricanes or earthquakes, wildfires are often susceptible to human intervention. Ed Nordskog, a retired Los Angeles County Sheriff’s arson investigator and profiler, notes that a connection exists between obsessive gambling and fire-setting, raising concerns that financial incentives could encourage criminal behavior.
Risks of Arson and Data Manipulation
The primary concern among investigators is the potential for moral hazard. Because wildfires can be started by human action, the existence of a betting market could theoretically provide a financial motive for arson. Furthermore, even in cases of naturally occurring fires, individuals might be incentivized to manipulate data to ensure a winning bet. A recent incident involving unusual temperature spikes at Charles de Gaulle airport in Paris highlights this risk; sensors recorded heat surges that resulted in large payouts for traders. Météo-France has since filed a police complaint, alleging the alteration of an automated data processing system.
Polymarket maintains that it monitors for illegal activity and utilizes the transparency of blockchain technology to trace potential wrongdoers. However, experts like Ann Skeet, senior director of leadership ethics at Santa Clara University, argue that betting on disasters fundamentally devalues human life and risks normalizing tragedies that have profound, long-term impacts on local communities.
Can Prediction Markets Improve Climate Forecasting?
While the risks are significant, some economists see potential utility in prediction markets if they have guardrails. Kim Kaivanto, an economist at Lancaster University Management School, directs a prediction market called CRUCIAL, which uses prediction markets to forecast climate risks. Unlike commercial platforms, CRUCIAL utilizes expert participants who are rewarded with credits rather than cash, focusing on the aggregation of accurate data rather than speculative profit.
Despite this, major government agencies remain skeptical. Both the U.S. Forest Service and the California Department of Forestry and Fire Protection have stated that they do not rely on, nor are they considering, prediction-market data for their fire modeling. Craig B. Clements, director of the Wildfire Interdisciplinary Research Center at San José State University, emphasizes that wildfire behavior is too complex to be accurately captured by current betting mechanisms.
Frequently Asked Questions
- Are prediction markets on wildfires legal? Legislative efforts are underway. Representatives from California and Utah have introduced bipartisan legislation to prohibit betting on events like terrorism, war, and illegal activity. Additionally, California Governor Gavin Newsom has strengthened bans on insider trading by state officials on these platforms.
- Do these markets help predict fire behavior? Most experts, including those at the U.S. Forest Service, argue that these markets do not improve forecasting and note that wildfire spread involves too many variables for speculative betting to be a reliable scientific tool.
- Why are experts concerned about arson? Forensic experts point to a documented link between obsessive gambling and fire-setting. They fear that adding a financial reward for specific fire outcomes could provide a direct incentive for individuals to set or extend wildfires.
Pro Tip:
When evaluating the impact of new technology on environmental policy, look for the distinction between “expert prediction markets” that prioritize data accuracy and “speculative markets” that prioritize trading volume. The former often uses non-monetary incentives to ensure the integrity of the information provided.
Have you encountered prediction markets for environmental events? Share your thoughts in the comments below or subscribe to our weekly newsletter for more updates on the intersection of technology and climate change.
Worth a look