Protecting Watersheds and Preventing Catastrophic Wildfire: Yuba I Forest Resilience Bond Returns Investor Capital

December 4th, 2023
Written by Blue Forest and World Resources Institute

press release

Sacramento, CA (December 4th, 2023) – Blue Forest, a conservation finance non-profit, in
partnership with World Resources Institute (WRI), USDA Forest Service (USFS), and National
Forest Foundation (NFF), announced the successful completion of its pilot Forest Resilience
Bond (FRB), marking five years since the project launched. In a conservation finance industry
milestone, the Yuba I FRB returned all investor capital in line with expectations, financing
restoration efforts on a 15,000 acre planning area on the Tahoe National Forest, which reduced
the risk of catastrophic wildfire. As climate leaders gather today at COP28 to discuss how to
finance the change the world needs, this milestone exemplifies how investments in nature can
successfully accelerate solutions, benefit public lands and return capital.

The FRB, co-developed by Blue Forest, WRI, USFS, and NFF, is an innovative financing
mechanism that taps into private capital to finance forest restoration projects on public lands to
protect communities, ecosystem benefits, and rural livelihoods. The implementation of the
upfront capital provided by the FRB allows for financial flexibility to accelerate the pace and
scale of restoration treatments, as well as the increased ability to hire local contractors,
supporting the local economy.

Capital deployed through the Yuba I FRB will result in:
● Over 51,600 acre-feet water supply protected in the Yuba watershed
● 51,000 MT Co2e of avoided wildfire carbon emissions¹
● Completion in five years, instead of the projected ten to twelve years
● Reduced risk of catastrophic wildfire in and around the project area, with reduction in
acres experiencing long (>6 ft) flame lengths from 3,771 to zero
● 68,000 tons of biomass utilization
● Over 70,000 MWh of renewable energy generated by biomass and hydropower
protection
● 70 jobs supported and sustained

Todd Gartner, Cities4Forests and US Lands Director at WRI, states that ”The Yuba I FRB
was successful due to the compelling business case for all involved. Investors received an
acceptable return, utility infrastructure risk was cost-effectively reduced, and the U.S. Forest
Service accomplished its land management goals, bigger, better, and faster.”

Yuba I raised $4 million to finance ecological restoration treatment and prevention of
catastrophic wildfire, demonstrating the opportunity for environmental impact bonds as well as
the impact of blended financial models. The funding consisted of both concessionary capital
from the Gordon & Betty Moore Foundation and the Zero Gap Fund, an impact investing collaboration between The Rockefeller Foundation and the John D. and Catherine T. MacArthur
Foundation, and market-rate capital from CSAA Insurance Group and Calvert Impact Capital.
Planning was completed by USFS, who chose the NFF to manage the implementation of
restoration activities on the Tahoe National Forest. FRB project funding was supported by the
California Climate Investment Program grant funds awarded by California Department of Fire
and Forestry, and beneficiary financial participation from the Yuba Water Agency and the USFS
as a result of the water security and wildfire risk reduction benefits the project provides.

“Wildfires in the U.S. are surging in frequency and severity, a result of past fire suppression
policies coupled with a changing climate,” said Maria Kozloski, Senior Vice President of
Innovative Finance at The Rockefeller Foundation. “The Forest Resilience Bond’s success
underscores the necessity of scaling finance models for ecosystem restoration to mitigate
wildfire risks.”

The successful launch of the Yuba I FRB laid the groundwork for the formation of the North
Yuba Forest Partnership in 2019, a collaborative focused on forest restoration across 275,000
acres of public and private lands in Northern California, including the $25 million, 50,000 acre
Yuba II FRB launched in 2021. This partnership has attracted over $150 million in funding to
continue forest restoration work in the North Yuba watershed.

“Given all the threats to National Forests, we need to speed up our work to stay ahead of the
next crisis,” said Marcus Selig, Chief Conservation Officer at the National Forest
Foundation. “Historically, having necessary funding at the ready has been challenging. The
partnership with Blue Forest has provided the cash flow we need so we can proactively improve
our National Forests.”

Watch the story behind the Yuba FRBs: “Scaling Restoration Efforts to Protect a
Watershed”

The growth of FRBs across the Western United States, based on the success of the Yuba I FRB
and promising progress from the Yuba II FRB, has continued through the FRB Catalyst Facility,
a pooled investment vehicle that finances high-impact ecological restoration projects with
revolving loans, including the 79,000 acre Rogue Valley I FRB.

“There is immense opportunity for finance to continue to play a role in significantly advancing
ecosystem restoration. At Blue Forest we’re excited to be leveraging the success of the Yuba I
FRB in order to continue to deploy financing solutions across the West to enhance
environmental resiliency and reduce the risk catastrophic wildfires.” said Zach Knight, CEO of
Blue Forest.

About Blue Forest

Blue Forest is a conservation finance nonprofit focused on forest restoration. Since 2018, Blue
Forest has managed investor capital through its flagship financial product, the Forest Resilience
Bond, which deploys private capital to finance forest restoration projects on private and public
lands to reduce the risk of catastrophic wildfire. More recently, Blue Forest has also established
Blue Forest Asset Management (BFAM), an investment management platform connecting
investors to compelling, mission-aligned opportunities in a broader set of asset classes beyond
FRB projects, such as private equity and private credit investments.

About WRI

World Resources Institute (WRI) is a global research organization with offices in Brazil, China,
Colombia, India, Indonesia, Mexico and the United States, and regional offices for Africa and
Europe. Our over 1,700 staff work with partners to develop practical solutions that improve
people’s lives and ensure nature can thrive. Learn more: WRI.org and on Twitter
@WorldResources.