Model and Strategy
Wildfire seasons have intensified to unprecedented levels, threatening entire communities. At the same time
California is suffering from an historic drought. These challenges are linked healthy forest density plays an
integral role in minimizing wildfire risk while maximizing water resources from forest snowpack. However, restoring
forests, which reduces wildfire risk, increases water volumes, protects water quality, and supports job creation,
requires funds that the US Forest Service does not have.
The Forest Resilience Bond (FRB) deploys private capital to fund forest restoration with investors repaid through
pay-for-success contracts with beneficiaries. By aligning incentives for the forest service and utilities, the FRB
creates compelling economics for beneficiaries and investors, sharing costs and benefits among them. As the first
outcomes-based environmental security, the FRB seeks to revolutionize collaboration between the public and
private sectors to fight climate change.
Impact
Scaling forest restoration through the FRB model will support healthy forests and watersheds by disrupting the vicious USFS budget cycle that favors reaction over prevention. Some longer term impacts include:
(1) lower risk of wildfire, which will protect lives, homes, and habitat
(2) budget savings for the USFS and utilities
(3) preventing devastating black carbon emissions associated with large fires
(4) protecting watershed quality
(5) increasing water volumes available for both downstream water utilities and hydroelectricity generation
(6) creating forest restoration jobs for rural, middle class communities while protecting the livelihoods of farmers, who rely on sufficient water supplies for crop production
To date, all forest restoration on public lands has been funded by public and philanthropic capital. By shifting these capital intensive investments to the private sector, the FRB has the potential to catalyze billions in annual private investment across the US. The FRB will also have the broader impact of laying the foundation for countless other pay for success transactions in the environmental space, redefining how society addresses environmental challenges.
Leadership
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Barbara Buchner
Executive Director, Climate Finance