Landscape Fire and Entrepreneurial Activity: An Empirical Study Based on Satellite Monitoring Data

Abstract

Climate change and land-use change are making landscape fires worse, causing them to grow in intensity and spread in range across Earth’s ecosystems. Extreme landscape fires can be devastating to people, ecosystems, and sociology. However, most research on landscape fires has not considered their potential impact on the economy, particularly with regard to entrepreneurial activity. Entrepreneurial activity includes the entry of new markets and the creation of new products or services, thereby facilitating the creation and expansion of economic activity. This manuscript empirically analyzes the impact of landscape fires on entrepreneurial activity, based on satellite monitoring data of landscape fires in China from 2014 to 2018. Different wind direction models and instrumental variable methods are used for empirical analysis. The results of the analysis show, first, that an increase in landscape fires in a county can significantly reduce local entrepreneurial activity. We further adopt the wind direction approach and instrumental variable approach to deal with potential endogeneity issues, and the regression results are consistent. Second, compared to eastern or high-economic-development areas, central and western or low-economic-development areas are more susceptible to exogenous landscape fires. Third, landscape fires have a negative impact on entrepreneurial activity through increasing air pollution, damaging human health, increasing risk aversion, and reducing the labor supply. It is important for both the government and the public to fully recognize the potential dangers that landscape fires pose to corporate behavior. This awareness can help reduce the impact of natural disasters such as landscape fires, protect the ecological environment, and provide solid support for corporate investment and regional development.