Aging and stressed, America’s water infrastructure is facing a $1 trillion investment gap over the next 25 years. At same time, an increasingly hotter and drier climate is threatening forested headwaters that once delivered clean and abundant water flows to downstream users. Devastating wildfires and resulting post-fire rainfall flood existing built infrastructure and dump unhealthy amounts of sediment into reservoirs.
In partnership with the Colorado State University’s Forest Restoration Institute and the US Endowment for Forestry and Communities, the World Resources Institute recently released a timely report detailing solutions to fill the water infrastructure funding gap through innovative watershed investment programs. These multi-stakeholder partnerships seek to sustain the supply of clean and safe water to communities by aligning incentives of downstream water users, upstream landowners, philanthropic and institutional investors, and others to fund and share the resulting benefits of watershed protection and restoration projects.
A particularly vexing challenge for watershed investment program development is enticing collaboration among beneficial stakeholders who have no history working together. The report highlights that articulating real and urgent risks facing each - especially in the “wake of a sudden catastrophic event that threatens water supplies (such as a forest fire)” - and demonstrating how shared challenges can be overcome through collaboration are key to building stakeholder support for new programs. It was the destructive aftermath of the Hayman and Buffalo Creek Fires in the early 2000s (including $26 million in cleanup costs), that enabled the Denver Water-U.S. Forest Service Watershed Protection Partnership, which has funded nearly $33 million in forest restoration to reduce wildfire risk and restore burned acres.
Even when stakeholders recognize shared risks and are open to collaboration, it is often difficult to make a rigorous business case for watershed improvements. To address this, the Portland Water District (PWD) commissioned a scientific “green-grey assessment” conducted by WRI and several partners to compare the costs and benefits of natural (“green”) watershed investments with a traditional built (“grey”) infrastructure solution to protect water supply. The study’s finding that PWD could avoid more than $12 million in costs over a 20-year period with the natural “green” investment supported PWD’s decision to commit more than $200,000 annually in improved watershed management.
These and other solutions to watershed investment challenges demonstrate the need for like-minded coalitions to take an integrated, systems-level approach to address incentive gaps and develop financing solutions. To motivate the billions of dollars of conservation-focused private investment off of the sidelines, Blue Forest Conservation, WRI, and Encourage Capital are leading a coalition to develop a scalable and flexible public-private partnership for public lands called the Forest Resilience Bond (FRB). The FRB raises and deploys private capital to fund watershed improvements and allows beneficiary stakeholders (such as the US Forest Service, water and electric utilities, and private water dependent companies) to repay investors over time as economic benefits are realized.
With motivated stakeholders, a viable investment vehicle, and eager values-driven investors, this partnership hopes that the FRB can allow for smarter, science-driven collaboration to plug a small but growing piece of America’s $1 trillion water infrastructure funding gap - all while creating sustainable rural jobs and protecting homes and habitats from catastrophic wildfires in the process.