FOREST RESILIENCE BOND Intr oduction to the Fores t Resilience Bond August 2020 WORL BLUE , FOREST RE OUR S CONSERVATION I STITU E
Summary ► Accelerating pace of wildfires ► Forest restoration is preventative solution, but lacks funding ► Forest Resilience Bonds (FRBs) = proven public-private partnerships to finance/fund restoration with market-rate returns – Decrease risk of severe wildfire – Environmental & climate benefits – Support & protect rural communities ► Investors include Rockefeller Foundation, Moore Foundation, Calvert Impact Fund and AAA Insurance ► Proven partnership with USFS – First solution to finance public lands management at scale ► Robust Pipeline of future projects FOREST RESILIENCE Page 2 BOND
~ West’s Biggest Natural Disaster Threat ios }\nget~, (£{~~ 'IlIB D ENVER POS T E OF ALARM Heat, drought-parched brush fuel ferocious fire ~adn 8' nbepenb ent Joutn al --·- · a:::::....;;:.: 'AN INFERNO LIKE YOU'VE NEVER SEEN' THE ARIZONA REPUBLIC AiGAH,;1n,j;;;c.....,. iiiiio , --- ----- CONTIJfUOU,: COVIMOI AT .uatn'I.AL-COM TRAGEDY 19 fil'9ighters killed I Yarnell residents flee; I lightnin g sparked fire; in last-moving wildfire; half of its 500 homes bk,ze continues to other injuries reported may be destroyed rage out of control FOREST RESILIENCE Page 3 BOND
□ ■ □ Western US Forests & Communities at Risk ► 58M acres at high-medium wildfire risk ► $76B-$130B long term annual wildfire health risk ► 65% of CA water supply originates in forested watersheds ► Over $220B property at extreme risk ► CA forests becoming net carbon emitters 2018 USFS Wildfire Hazard Potential Low Moderate High FOREST RESILIENCE Page 4 BOND
Path to Overgrown Forests 1890 1993 Photo Credit: George E. Gruell, Fires in the Sierra Nevada, 2001 RESILIENCE Page 5 BOND
Proven Solution: Forest Restoration ► Mechanical and hand thinning ► Prescribed fire ► Meadow restoration ► Invasive plant removal ► Native aspen regeneration ► Road decommissioning RESILIENCE Page 6 BOND
Less Fuel for Wildfires Overgrown Restored FOREST RESILIENCE BOND
-► The Finance Problem Assuming an industry USFS 2017 Highest average of $1,000/acre, Restoration the need for restoration on Priority Budget 1 USFS land is $58 billion, or Projects: $11B Total Market for 136x current funding l Restoration 3 : $58B • $424 million FOREST RES ILIE NCE 1. USFS Fiscal Year 2017 Budget Overview ($40 million for CFLRP and $384.1 million for hazardous fuel reduction) 8 2. USFS Fiscal Year 2017 Budget Overview (58 million acres at “high or very high risk of severe fire” @ $1,000/acre) BOND
Benefits of Restoration Wlld(lre Severity Shared Resources Community Resilience FOREST RESILIENCE Page 9 BOND
c:- ■ ~ :l How FRBs Work ro 0.J Implementation Partners ' FOREST ·-· RESILIENCE Investors BOND ' Beneficiaries Fire Sup • and Wi press,on ater Benefits • Outbound Cash Flow ... Inbound Cash Flow ... Resource Flow FOREST RESILIENCE Page 10 BOND
Pilot FRB: Yuba Restoration ► North Yuba River Watershed, Tahoe NF, California - ► $4M FRB - - j ► Restoration work 2019 – 2022 ► Restoring 7,114 acres => protecting 15,000 acres ► Key partnerships: USFS, CA State and Yuba Water Agency ► Market rate investors earn 4%, 1% for PRI lenders FOREST RESILIENCE Page 11 BOND
Pilot FRB: Structure & Stakeholders - -= R_ Cl .,C KEFELLER $ Calvert = . FOUNDATION Impact Capital Investors MOORE ~ nee FOUNDATION l l l Loan Agreements FOREST Green = cash flows Orange = contracts RESILIENCE BOND Service Contract Loan Agreement * - NATI O NAL 'll~Ql§~J CALIFORNIA REPUBLIC Grant Stewardship Agreement Agreement FOREST RESILIENCE Page 12 BOND
Pilot FRB: Expected Benefits ► Protect 50k acre-feet of water ► Generate 70k MWh of hydropower ► Avoid 50k metric tons of CO 2 emissions ► Create 79 jobs in local rural communities ► $8.8M value to water agency FOREST RESILIENCE Page 13 BOND
USFS Testimonial “Typically, a large restoration project such as Yuba would take over ten years, if ever fully implemented. Instead, we will complete it within three years. This means a healthier, more resilient forest before insects, disease or wildfire negate our planning and before our communities are adversely impacted.” - Alonzo “Lon” Henderson, District Ranger, Tahoe National Forest FOREST RESILIENCE Page 14 BOND
Driving Scaled Investment and Impact ► Start with initial FRB of $4M - $10M ► Scale to future FRBs of $100M+ – Same watershed – Same stakeholders – Same contracts ► Cornerstone for sustainable rural development FOREST RESILIENCE Page 15 BOND
Pipeline California FRB Opportunities Description of National Forests Engagement Level Expressed interest Lassen, Inyo, San Bernardino in FRB Yuba Project (15k acres) In preliminary Klamath, LTMBU, Stanislaus, conversations Sierra Crystal Basin Project Trapper Project Project area (32k acres) defined, beneficiary Eldorado, Tahoe (Trapper (30k acres) engagement Project) ongoing Active project in Tahoe (Yuba Project) place FOREST RESILIENCE Page 16 BOND
~ Impact Reporting Aligned with SDGs 6 CLEA WATER ANO SA ITATIO 17 PARTNERSHIPS FOR THE GOALS 8 SUSTAINABLE DECENT WORK ANO DEVELOPMENT ECONOMIC GROWTH G~ ALS FOREST RESILIENCE Page 17 BOND
Key Partnerships Established A BLUE 0 FOREST CONSERVATION Financial Innovation for Sustainable Solutions NATIONAL O WORLD U.S. Endowment OREST RESOURCES for Forestry and Communities F O u O AT 10 INSTITUTE natural Stanford capital Water in the West PROJECT FOREST RESILIENCE 18 BOND
Current Investors & Backers rt THE =i Calvert ~ =i ~ KEFELLER ¾ Impact Capita l" FOUNDA TI ON GORDON AND BETTY MOORE Insurance FOUNDATION Bella Vista sprf ng ClimateWorks point . FOUNDATION FOUNDATION WEYE RHAEUS ER FAMILY - FOUNDAT I ON - fftl I Brownstein Hyatt tU) Farber Schreck FOREST RESILIENCE 19 BOND
Next Steps + Opportunities ► Work with COIN (and directly with insurers) to include more insurance investors in future projects/funds ► Partner with insurance companies on joint research projects to better understand, quantify and ultimately help mitigate wildfire risks ► Develop new finance products (not insurance products) to allow for insurers to opt in to supporting wildfire risk reduction ► Federal partners can be hard to work with, especially for the private sector, let us help! FOREST RESILIENCE 20 Page 20 BOND
FOREST RESILIENCE BOND Thank You zach@blueforest.org A WORLD BLUE 0 FOREST RESOURC S CONSERVATION NSTITUTE
Recommend
More recommend
