Like many Californians, Zach Knight is getting used to parts of the state being regularly engulfed in flames. Wildfires have become an apocalyptic feature of life on the West Coast, driven by a few hundred years of forest mismanagement.
Unlike many environmental problems, this one has a clear remedy. Thousands of acres of forest land have to be rehabilitated. Trees need to be thinned and controlled burns introduced regularly. One problem: the U.S. Forest Service is spending so much of its budget putting out fires that there isn’t enough money left to do the work that would prevent them.
“This is no longer a science problem,” said Knight. “It’s actually a finance problem.”
It’s a problem that Knight and his startup, Blue Forest Conservation, have set out to solve. He and co-founders Leigh Madeira, Nick Wobbrock and Chad Reed, all Berkeley business school alumni, designed a new financial product that could help speed up forest restoration by decades or even centuries. Investors who buy “forest resilience bonds” can pay for forest rehabilitation up front, seeing a return on their investment as other organizations that also benefit from forest reclamation pay the bond down.
Their idea is already being put into action: This summer, a $4 million bond will pay for the National Forest Foundation to restore 5,000 acres of the Tahoe National Forest. The investors — CSAA Insurance Group, Calvert Impact Capital, the Rockefeller Foundation and the Gordon and Betty Moore Foundation — will see a four percent return in annual payments from a water utility and the California Department of Forestry and Fire Protection.
Knight said that the success of the bonds depends on getting organizations to realize how much they can benefit from forest restoration. Water and electric utilities, flood control districts, state agencies and private companies like breweries all benefit from cities that are protected from fires, an improved job market and cleaner water and air. “All of these also benefit from this work, but haven’t been paying for it in the past,” Knight said.
Convincing these groups that financially supporting this work will pay off might be an easier sell as wildfires continue to devastate the California landscape. “This is not an anomaly, it’s a problem that’s really getting worse,” Knight said. “We’re not having more fires — we’re having fewer, bigger fires.”
Native American communities used controlled fire as an agroforestry tool, promoting a varied ecology and preventing larger blazes, Knight said. But after 1911, federal law forbade starting any fires on public forest lands — leaving forests unnaturally packed with tinder. This has become a deadly problem when combined with climate change: 12 of California’s 15 largest wildfires have occurred since 2000, and 460,000 acres burned last summer alone.
Thinning forests costs about $1,000 per acre, and the U.S. Forest Service has a backlog of 82 million untended acres. So if we’re going to fight wildfires in a meaningful way, Blue Forest Conservation’s innovation might be the way forward.
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