NATIONAL ARSON LOSSES ARE ESTIMATED AT $1.3 BILLION PER YEAR, BUT ARSON TAX LOSSES MULTIPLY THESE FIGURES MANY TIMES. TO IMPROVE MANAGEMENT OF ARSON PROGRAMS, STATE AND LOCAL AGENCIES NEED FEDERAL ASSISTANCE IN ANALYZING THEIR DATA TO IDENTIFY THE TYPES OF ARSON THAT ARE OCCURRING IN THEIR COMMUNITIES, MUNICIPAL ARSON EARLY WARNING SYSTEMS SHOULD BE IMPLEMENTED TO PREDICT WHERE ARSON MAY OCCUR AND PERMIT PREVENTIVE ACTION. IN ADDITION, PUBLIC ARSON EDUCATION TO PUBLICIZE ANTI-ARSON EFFORTS AND SUCCESSFUL PROSECUTIONS SHOULD BE INSTITUTED. HIGH ARSON INCIDENCE AREAS CAN ALSO BENEFIT FROM COMMUNITY ACTION EFFORTS. TO ENHANCE INVESTIGATION AND PROSECUTION OF ARSON, FIREFIGHTERS, POLICE, AND PROSECUTORS NEED TO IMPROVE COORDINATION WITH EACH OTHER. FEDERAL PROSECUTION ASSISTANCE SHOULD BE PROVIDED WHERE PRESENCE OF ORGANIZED CRIME OR HIGH INCIDENCE MAKES IT DIFFICULT FOR LOCAL AUTHORITIES TO RESPOND TO THEIR PROBLEMS. IMPROVED TRAINING SHOULD BE REQUIRED FOR FIREFIGHTERS, FIRE INVESTIGATORS, POLICE, PROSECUTORS, AND INSURANCE ADJUSTERS. MOREOVER, STATE AND LOCAL GOVERNMENTS NEED ASSISTANCE AND LABORATORY SUPPORT TO IDENTIFY ACCELERANTS AND TO PROCESS CRIMINAL EVIDENCE. IN THE ECONOMIC AREA, INCENTIVES TO ARSON IN LAWS AND POLICIES AFFECTING THE INSURANCE, BANKING, HOUSING, AND COMMERCIAL INDUSTRIES MUST BE ELIMINATED. INSURANCE UNDERWRITING AND CLAIMS PROCEDURES MUST BE MODIFIED AND FRAUDULENT CLAIMS MUST BE CONTESTED. ALSO, OPPORTUNITIES TO ABUSE FEDERAL AND STATE HOUSING AND LOAN INCENTIVE PROGRAMS IN ARSON-FOR-PROFIT SCHEMES MUST BE REMOVED, AND MONITORING AND ANALYSIS MUST BE USED TO DETECT COMMERCIAL ARSON SCHEMES. FINALLY, COMMUNITIES WITH JUVENILE FIRESETTING PROBLEMS SHOULD RECEIVE TRAINING IN THE SUCCESSFUL METHODS WHICH HAVE BEEN DEVELOPED TO DEAL WITH THIS PHENOMENON. PROSECUTORS AND FIRE SERVICE PERSONNEL MUST BE TRAINED TO DEAL WITH REVENGE-MOTIVATED FIRES, AS WELL. ALTHOUGH ARSON WILL REMAIN PRIMARILY A LOCAL PROBLEM, THE FEDERAL GOVERNMENT CAN PROVIDE ASSISTANCE TO LOCAL AND STATE AGENCIES TO SUPPORT THEIR ARSON PREVENTION AND CONTROL PROGRAMS. THE REPORT HIGHLIGHTS FEDERAL PROGRAMS FOR REDUCING ARSON, STATE AND FEDERAL ARSON LAWS, AND PRESENTS A COST-BENEFIT MODEL WHICH SIMULATES THE INTERACTION OF THE MAJOR VARIABLES ASSOCIATED WITH THE CAUSES AND PREVENTION OF ARSON. PHOTOGRAPHS AND FOOTNOTES ARE INCLUDED. A BIBLIOGRAPHY AND ACKNOWLEDGMENTS ARE APPENDED. (AUTHOR ABSTRACT MODIFIED--PRG)