Seems like the liability problem could possibly be worked out if you had some entity that pays for the damages either way, and then they have an incentive to do

Seems like the liability problem could possibly be worked out if you had some entity that pays for the damages either way, and then they have an incentive to do the thing that has probabilistically the least cost. For instance, if the government agency responsible for forest management were to take out a fire damage insurance policy, and the insurance company were free to set different rates depending on how the forest is managed. I think non-flammable buildings are a reasonable suggestion in general, but in a lot of cases the amount of heat involved in a serious forest fire just isn't survivable by any ordinary structure, even if the roof is steel and the walls are made of cinder blocks. Landscaping restrictions might help, but it would have to be a lot more than 5 feet. And I think a lot of people would be justifiably resistant to restrictions such as requiring people to cut down all the large trees within a hundred yards of their house. Trees make the built environment much more pleasant to live in.