Intr oduction to the Fores t Resilience Bond August 2020 WORL - - PowerPoint PPT Presentation

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Intr oduction to the Fores t Resilience Bond August 2020 WORL - - PowerPoint PPT Presentation

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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

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FOREST RESILIENCE BOND

WORL

RE OUR S

I

STITU E

BLUE , FOREST

CONSERVATION

Intr

  • duction to the

Fores t Resilience Bond

August 2020

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SLIDE 2

FOREST RESILIENCE BOND

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

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OF ALARM

Heat, drought-parched brush fuel ferocious fire

E

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 bk,ze in last-moving wildfire; half of its 500 homes continues to g sparked fire;
  • ther injuries reported
may be destroyed rage out of control

'IlIB D ENVER POST

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8'nbepenbent Joutnal

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'AN INFERNO LIKE

YOU'VE NEVER SEEN'

FOREST RESILIENCE BOND

West’s Biggest Natural Disaster Threat

Page 3

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SLIDE 4

□ □ ■

FOREST RESILIENCE BOND

Western US Forests & Communities at Risk

Low Moderate High 2018 USFS Wildfire Hazard Potential

► 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

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RESILIENCE BOND

Path to Overgrown Forests

1890 1993

Photo Credit: George E. Gruell, Fires in the Sierra Nevada, 2001

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RESILIENCE BOND

Proven Solution: Forest Restoration

► Mechanical and hand thinning ► Prescribed fire ► Meadow restoration ► Invasive plant removal ► Native aspen regeneration ► Road decommissioning

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SLIDE 7

FOREST RESILIENCE BOND

Less Fuel for Wildfires

Overgrown Restored

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SLIDE 8

The Finance Problem

8

ILIE

$424 million USFS 2017 Restoration Budget1 Highest Priority Projects: $11B Total Market for Restoration3: $58B Assuming an industry average of $1,000/acre, the need for restoration on USFS land is $58 billion, or 136x current funding

1. USFS Fiscal Year 2017 Budget Overview ($40 million for CFLRP and $384.1 million for hazardous fuel reduction) 2. USFS Fiscal Year 2017 Budget Overview (58 million acres at “high or very high risk of severe fire” @ $1,000/acre)

l

  • ►

FOREST RES NCE BOND

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FOREST RESILIENCE BOND

Page 9

Benefits of Restoration

Shared Resources

Wlld(lre Severity Community Resilience

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SLIDE 10

FOREST RESILIENCE BOND

Page 10

How FRBs Work

~

'

Investors FOREST RESILIENCE BOND

  • Outbound Cash Flow

...

Inbound Cash Flow

ro

0.J

Implementation Partners

·-·

c:- ■

:l

Beneficiaries

... Resource Flow

'

Fire Sup

  • and Wi

press,on ater Benefits

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SLIDE 11

Page 11

Pilot FRB: Yuba Restoration

► North Yuba River Watershed, Tahoe NF, California ► $4M FRB ► 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

  • j
  • FOREST

RESILIENCE BOND

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SLIDE 12

*

CALIFORNIA REPUBLIC
  • =

R_ Cl

.,CKEFELLER FOUNDATION

MOORE

FOUNDATION

l

  • $ Calvert

.

=

Impact Capital

~ nee

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FOREST RESILIENCE

BOND

  • NATIONAL

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FOREST RESILIENCE BOND

Pilot FRB: Structure & Stakeholders

Investors

Service Loan Agreements

Green = cash flows Orange = contracts

Contract Loan Agreement Grant Stewardship Agreement Agreement

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FOREST RESILIENCE BOND

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Pilot FRB: Expected Benefits

► Protect 50k acre-feet of water ► Generate 70k MWh of hydropower ► Avoid 50k metric tons of CO2 emissions ► Create 79 jobs in local rural communities ► $8.8M value to water agency

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FOREST RESILIENCE BOND

Page 14

  • Alonzo “Lon” Henderson, District Ranger,

Tahoe National Forest

USFS Testimonial

“Typically, a large restoration project such as Yuba would take

  • ver 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.”

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Page 15

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 BOND

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Page 16

Pipeline California FRB Opportunities

Description of Engagement Level National Forests Expressed interest in FRB Lassen, Inyo, San Bernardino In preliminary conversations Klamath, LTMBU, Stanislaus, Sierra Project area defined, beneficiary engagement

  • ngoing

Eldorado, Tahoe (Trapper Project) Active project in place Tahoe (Yuba Project)

Trapper Project (30k acres) Yuba Project (15k acres) Crystal Basin Project (32k acres) FOREST RESILIENCE

BOND

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Page 17

Impact Reporting Aligned with SDGs

8

DECENT WORK ANO ECONOMIC GROWTH

~

6

CLEA WATER ANO SA ITATIO

SUSTAINABLE DEVELOPMENT

G~ ALS

17 PARTNERSHIPS

FOR THE GOALS

FOREST RESILIENCE BOND

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Key Partnerships Established

18

A

BLUE 0 FOREST

CONSERVATION

Financial Innovation for Sustainable Solutions

WORLD RESOURCES INSTITUTE

NATIONAL O

U.S. Endowment

OREST

F O u O AT 10

for Forestry and Communities

natural

capital

PROJECT

Stanford

Water in the West

FOREST RESILIENCE BOND

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SLIDE 19

Current Investors & Backers

19

THE

~

=i~ KEFELLER

FOUNDA TION

GORDON AND BETTY

MOORE

FOUNDATION

sprf ng

point.

ClimateWorks

FOUNDATION

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tU)

rt

=i Calvert

¾

Impact Capital"

Insurance

Bella Vista

FOUNDATION

WEYERHAEUSER FAMILY

  • FOUNDAT ION -

I

Brownstein Hyatt Farber Schreck

FOREST RESILIENCE BOND

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Page 20

Next Steps + Opportunities

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► 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 BOND

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Thank You

zach@blueforest.org

FOREST RESILIENCE BOND

WORLD RESOURC S NSTITUTE

A

BLUE 0 FOREST

CONSERVATION