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As wildfires ravage western America, the immediate risk is to life and property, but they will eventually affect the water supply.
This is one of the reasons why big companies are starting to help finance forest restoration to mitigate their water risks.
The water supply for many communities, including large cities, begins in the mountains and national forests. In California, about 70% of water begins or passes through national forests, according to Forest Service estimates.
“When we have large scale fires like this, we get huge amounts of erosion that ends up filling the dams and reservoirs that store water and help create hydropower,” Eli said. Ilano, forestry supervisor of the Tahoe National Forest. “This is why there is a tremendous sense of urgency in working in forests, clearing them and restoring them, to make them more resilient to climate change and these catastrophic large-scale fires.”
After large-scale forest fires, mudslides often ensue, filling reservoirs, contaminating their water and reducing their capacity. Cleaning tanks is expensive and time consuming. And it’s not just mud.
Trees also help hold water in mountains and then slowly release it so that dams and reservoirs don’t have to deal with a sudden influx of water.
Companies are now coming to the idea that they must help finance the preservation of forests to protect the water reserves essential to their activity.
“Companies in all kinds of different industries, in the beverage industry, the agriculture industry, the tech industry, they all take this very seriously and are looking at how they can be part of the solution,” said Todd Gartner, director of Cities4Forests and WRI. Natural infrastructure initiative.
In the tech industry, for example, many data centers, which need water to cool computer banks running indoors, are in water stressed areas. For other product manufacturers, water is crucial for every aspect of the process.
“Water is essential to our business. We need it to make our products, and we need it to use our products in homes, ”said Shannon Quinn, global leader in water management at Procter & Gamble.
Last year alone, Procter & Gamble awarded a $ 200,000 grant to restore 400 acres in the Eldorado National Forest, which supplies water supplies to the cities of Sacramento and the San Francisco Bay Area.
“Businesses have a responsibility to fix these issues. And for water in particular, I think it’s really about identifying areas where your business may be at risk,” Quinn said.
Two years ago, the nonprofit Blue Forest Conservation launched the very first Forest Resilience Bond at $ 4 million.
“It’s really a public / private partnership in which we have engaged investors like pension plans, insurance companies … reducing the risk of catastrophic forest fires,” the founder said at the time. by Blue Forest, Zach Knight.
Private capital was used to thin out and restore approximately 15,000 acres in the Tahoe National Forest. Investors are reimbursed by local water and hydropower utilities.
Now, in collaboration with the World Resources Institute, Blue Forest is about to launch its second Forest Resilience Bond, aimed at restoring 48,000 acres of forest.
The $ 25 million is more than six times the value of the first issue, and investor interest is so strong that there is already about an additional $ 200 million in the pipeline for additional bonds, according to Knight.
The return on the Forest Resilience Bond is only around 4%, but investors are more interested in reducing their risk of costly drought and disruption to their water supply.
While most investors are initially foundations and pension funds, Gartner says large companies are now at the table, planning to invest in future deals. He said he couldn’t name them.
“They are increasingly interested in how this fits into their water goals, into their community benefit goals, and how they can leverage investments from government, utilities and even ‘other companies to do this work at scale and take advantage of the leverage of multiple actors working for impact at scale, “he said.
Eldorado National Forest is affected by the Caldor Fire, which has burned more than 200,000 acres and is threatening the resort town of South Lake Tahoe in California. The state has closed all national forests to public access until at least September 17 to reduce the risk of fires and keep firefighters safe.
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