The financial and economic impact of warehouse fires – Cebr

An evidence-based assessment of the direct and indirect economic impacts in England and Wales of fires in warehouse buildings without automatic fire sprinkler systems (AFSS)

This report by Centre for Economics and Business Research (Cebr) quantifies the financial and economic value of the damage and disruption caused by fires in commercial warehouse premises located in England & Wales which are not fitted with automatic fire sprinkler systems (AFSS).

Current legislation on fire safety primarily seeks to guard against loss of life and the spread of fire to surrounding premises, with little provision for the protection of the premises itself or its physical contents, which can include valuable inventory and capital assets like machinery and equipment. Such a provision would provide better incentives for the parties to commercial warehouses (developers, owners, occupiers etc.) to invest in active fire protection measures such as AFSS. This would, in turn, serve the primary objectives anyway.

But such incentives can be clouded by the arrangements governing ownership and control of commercial premises – particularly in warehousing. The information asymmetries between the different parties to the premises has resulted in uncertainty surrounding the benefits that can be expected to be reaped from investment in AFSS. This has produced a market failure whereby the technology is underprovided. This report seeks to shed light on these uncertainties by assessing the financial losses to business as a result of warehouse fires and how this translates into losses to the economy of England and Wales