The estimated cost of restoration efforts in the State of California is likely to exceed $1 billion annually for the next 10 years. Neither the public authorities nor the private landowners have the budget capacity to implement this solution on their own and at the scale required. What’s more, the USFS increasingly finds itself fighting today’s fires with the funds designed to prevent tomorrow’s – using the vast majority of its capital to fight fires rather than prevent them. Instead of retroactively spending money protecting communities from large-scale out of control fires, we could be investing in restoration efforts. With the recent trend of more frequent and destructive wildfires showing no signs of slowing down; we need to shift gears and find more progressive methods to deploy philanthropic dollars and impact investment capital to speed and scale landscape restoration.
How do we match the right kinds of capital with the right opportunities to reduce our risk of wildfire and improve our forest lands? We need more individuals, communities and corporations to take accountability for the benefits they receive from the forests; if those could be quantified and measured, the forests restoration work would be paid for 100x over. In our October 8 Forest Futures Salon, we heard from some of the most effective financial minds focused on forests today: Todd Gartner, Director of the World Resources Institute’s Natural Infrastructure Initiative; Chris Larson, CEO of New Island Capital; and Dan Winterson, Program Director at the Gordon and Betty from Moore Foundation. Between the panel conversations and strong attendee engagement, there were several inspiring solutions that would minimize the risk of these projects and ultimately contribute to better forest health.
But first, it’s important to understand why forest projects require such a large financial commitment…
- Forest projects are expensive and difficult to fund. The upfront capital requirement is prohibitive for most individuals and companies who would otherwise engage in forest restoration work. Most projects are small-scale and dispersed and the returns are unpredictable, which makes investments more risky. Investors use the same due diligence resources whether they are looking at a 10,000-acre project or a 100,000-acre project.
- The price of timber is relatively unstable. Timber experiences cyclicality, with the price changing frequently. This makes modeling cash flows from timber projects difficult, and unattractive as an investment.
- Some vendors experience a Forest Service full of extensive procurement procedures. This makes starting new initiatives time-consuming and expensive.
- Investing in innovation is risky. There aren’t yet enough successful projects that provide a roadmap for investors looking at this space. We need more successful projects that have strong data to de-risk the space and encourage more investment.
Despite these roadblocks, all three were hopeful about the future of financing for forest restoration.
Key Takeaways & Looking Ahead:
- We need collaboration at the local, state and federal level. In Tahoe, there is a strong relationship between the Tahoe National Forest and the federal government, and that relationship has resulted in several large-scale forest treatment agreements. The Forest Resilience Bond, a collaboration between the World Resource Institute and Blue Forest Conservation, uses upfront capital investment to drive innovative partnerships between local authorities and the forest service resulting in increased forest restoration work.
- We need to invest in jobs in the woods and retrain firefighters to do more preventative work. Employ and train firefighters to carry out restoration forest work, making the risk of fire less likely, and ultimately saving the fire service further costs down the road.
- We need more philanthropic investment. Philanthropic organizations should consider dedicating their resources to forest health. There isn’t currently much capital coming to forest conservation, but perhaps recent forest fires will redirect flexible capital from high net worth individuals into the forests. If you are interested in donating to forest health, please learn more about our Forest Futures Fund.
- We need more private enterprises to build a developed field in the forest. More profitable, impactful companies will lead to a ripple effect as investors start to understand the drivers of success and failures. This will mean that forest restoration becomes easier to invest in, attracting more capital.
- There is an opportunity to build an integrated biomass campus, that finds value in smaller trees and uses byproducts of forest management activities to power biomass products. Additional activities like workshops for woodworkers may also be possible.
- Social License cannot be overlooked – communities can bring a consistent, persistent and generational approach to this work and the solutions. Investing in education, and advocacy will enable local residents and stakeholders to take more action towards better forest management in the future.
About Forest Futures
The Tahoe Truckee Community Foundation’s Forest Futures work focuses on a Venture Lab model to fuel innovation, cultivate sustainable economies for our region and create new jobs with the ultimate goal of preventing forest fires. We host several events a year as part of the Forest Futures Salon Series to engage in productive conversations with scientists, investors, policymakers, artists and entrepreneurs to work towards a healthier forest.
Learn more, view the recordings from our events and register for the next one HERE.