A Californian start-up wants to save millions of acres of forest from fires by partnering with the US Forest Service and local businesses on an innovative social impact bond. Around 82 million acres of forest currently need restoration work, but the Forest Service only has enough funds to work on some five million acres annually. One of the few instances where a bond of this type has been initiated by a start-up, it would bring in public and private money for restoration.
Results & Impact
Blue Forest Conservation has secured about $1m in funding from the Rockefeller Foundation, and a trial is scheduled for later this year, which could cover anywhere 4-10000 acres
Blue Forest Conservation, the US Forest Service, local water and electric companies
Under the Blue Forest proposal, private investors would provide money for forest restoration work. If the work is successful, the Forest Service and local utilities who stand to gain from better forest and water management would pay the investors a return. In this way, the project would channel private investment to government agencies. One way for investors to see how work is progressing is by looking at vegetation metrics from satellite data
Tahoe National Forest, California
Entrepreneurs, city dwellers
Cost & Value
Around $1 million in funding has been achieved
One current hurdle is that all the partners -public sector agencies and utilities companies - have different understandings of conservation work. One of Blue Forest Conservation's tasks is to recommend standardisation so all the partners are on the same page
Social impact bonds – also known as "pay for success" bonds – have exploded in popularity since they were invented in the UK in 2010. This project is believed to be the first for forest fires, and the first pitched to the public sector by a start-up
A San Francisco start-up is pitching government agencies a social impact bond to fight some of the worst forest fires in Californian history. The founders of a new San Francisco firm called Blue Forest Conservation want to help the state by channelling private investment to government agencies via the sale of so-called forest-resilience bonds.
Blue Forest Conservation’s scheme would be one of few instances where such bonds are initiated by a start-up rather than the public sector, and the money would be used to pay teams to cut small trees and clear plants. Investors would earn market rate returns through long-term cost-sharing contracts with partners such as the US Forest Service and water and electric companies, all of whom benefit from better forest management.
Over the last few years, the Forest Service has had to spend more time fighting fires than preventing them. Firefighting now counts for more than half of the Forest Service’s budget and around 82 million acres of forest currently require restoration to prevent fires. Due to a lack of funds, the Forest Service managed to work on only 4.6 million acres in 2014.
Several agencies that depend on the health of the forests stand to benefit. The Forest Service, water suppliers and power utilities could all contribute to paying for the bonds. Major water users such as breweries and bottling plants could also participate. In addition to reducing the risk of fires, the scheme is intended to allow more rainwater and groundwater to flow downstream to reservoirs, businesses and local homes.
Under the proposal, private investors would make funds available for restoration work. If that work is successful, the Forest Service and the local businesses who stand to benefit would agree to pay those investors a return. In this way, a large amount of private funding would be unlocked with only a comparatively small outlay over several years from the public sector.
Blue Forest has yet to sign a deal with the Forest Service, but has secured around $1m in funding from the Rockefeller Foundation. Its founders also aim to start small by raising just a few million dollars for their first bond, which will go towards conserving a small area in Tahoe National Forest.
“We are scoping out a number of areas where we could increase collaboration,” said Nick Wobbrock, co-founder and partner of Blue Forest Conservation. “We are looking at other projects which have already been through the permitting phase and the community collaboration phase. One thing for us to think about is that we don’t want investor money dictating where the projects take place.”
Mike Illenberg, a spokesman for the Forest Service’s parent agency, the US Department of Agriculture said partnering with outside groups is an “essential mechanism” for restoring forests.
Investment in areas of sustainability is a growing trend in public-private partnerships. From less than $1 trillion in 1995, there are now around $8 trillion investments in the US which are locked to environmental, social or corporate governance objectives, according to the Forum for Sustainable and Responsible Investment. As an industry, sustainable investing has seen 33% growth in the US since 2014.
(Picture: Flickr/Stuart Rankin)