The effect of extreme wildfire exposure on energy poverty: Evidence from Australia's Black Saturday bushfires

Abstract This study assesses the effects of the 2009 Black Saturday Bushfires (BSB), which primarily occurred in rural regions of Victoria and represent the deadliest bushfire event in Australia's history, on household energy poverty. Using a linear panel event‐study, an entropy‐balanced event‐study, and a staggered difference‐in‐differences (DiD) design, applied to matched longitudinal household and geographical data, our results suggest a significant increase in the likelihood of experiencing energy poverty among households residing within 15 km of wildfire areas. Specifically, we find that for households directly affected by the fires, the likelihood of being in energy poverty increases by 9.9–11.3 percentage points in 2010 and by 13.2–16.7 percentage points in 2011 across specifications, compared to 2005–2007, which is the reference period. We find that the data are statistically consistent with life satisfaction, perceived safety and quality of life fully mediating the effect of BSB exposure on energy poverty in 2010, and with perceived safety fully mediating the relationship in 2011. We also find that adopting longer‐term financial planning mitigated the adverse effects of BSB exposure on energy poverty.