Investors earn a return on a ‘forest resilience bond’ in California

ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, December 4 – Nonprofit Blue Forest partnered with World Resources Institute, the US Forest Service, and the National Forest Foundation five years ago to pilot a financing mechanism for proven techniques to protect forests from devastating wildfires and other climate risks. The “forest resilience bond” raised $4 million from investors to restore and protect 15,000 acres in the Yuba watershed in the Tahoe National Forest.

Blue Forest says the intervention, completed more than five years ahead of schedule, provided a return to investors “in line with expectations.” Investors were repaid by the Yuba Water Agency, the US Forest Service, and California’s Climate Investment Program.

The project “exemplifies how investments in nature can successfully accelerate solutions, benefit public lands and return capital,” Blue Forest said in a statement.

Scaling conservation

Among the impacts cited by Blue Forest: reduced risk of catastrophic wildfires; protection of 51,600 acre-feet of water; 56,000 tons of CO2-equivalent gas emissions avoided; generation of 70,000 megawatt-hours of energy from biomass and hydro-sources; and support for 70 jobs.

Blue Forest expanded restoration and conservation work in the watershed with the North Yuba Forest Partnership in 2019. The nonprofit has helped mobilize $150 million for the work, including a second resilience bond directing $25 million to a 50,000-acre zone in the watershed.

A broader Forest Resilience Bond Catalyst Facility, a revolving loan fund, finances projects in Oregon’s Rogue Valley and other forests in the western US.

Catalytic capital

The forest resilience bond was developed by Blue Forest to provide mechanisms through which private investors could support restoration and protection of public forestlands. The Gordon and Betty Moore Foundation and the Zero Gap Fund, an initiative of the Rockefeller and MacArthur foundations, committed concessionary capital to catalyze commercial investments from CSAA Insurance Group and Calvert Impact Capital.