Stella Project pilots innovative funding mechanism
In a recent announcement by the U.S. Department of Agriculture Secretary Thomas Vilsack, Blue Forest Conservation was recently awarded a Wood Innovation Grant of $249,ooo in support of expanding the Forest Resilience Bond (FRB) to the Pacific Northwest Region of the Forest Service. This grant complements funding provided through the Innovative Finance for National Forests grant program in 2020.
The FRB is a public-private partnership that allows private investment dollars to provide the upfront costs to implement forest restoration projects. Investors are paid back over time by stakeholders that benefit from a healthy, resilient forest ecosystem.
Ultimately, this model would reduce the overall cost of management activities on the forest and lower the risk of damaging fires by carefully implementing forest restoration and benefiting the economic and environmental health of rural communities.
“We recognize the Forest Resilience Bond as a creative approach to how our Forest can more effectively implement planned land management activities. The Forest encompasses approximately 1.8 million acres of public lands in need of support from partnerships like Blue Forest Conservation.” — Eric Burke, Natural Resources Staff Officer.
The purpose of the funds is to support the development of the first FRB in the state of Oregon, specifically for the Stella Project on the Rogue River-Siskiyou National Forest, modeled after successful pilot deployment in California on the Tahoe National Forest. The grant will be matched 100% by Blue Forest funders, as required by the terms of the grant for a total of $499,000, and the project duration will be for two years with planned implementation by June of 2022. Specifically, the goals are as follows:
- Produce a Forest Resilience Bond for the Stella Project (44,000 treatment acres) on the Rogue River- Siskiyou National Forest that will ensure the financial resources will be available to fund the implementation of an important project.
- Demonstrate how this model can be applied to other forests in the Pacific Northwest, beginning with Stella as a pilot with the intention to leverage the same stakeholders and contracts to scale up to large landscape resilience.
- Outreach to other National Forests, project stakeholders, and presentations at industry conferences.
Implementation of the Stella Project will begin in the fall of 2021, supplying 80 million board feet of restoration byproduct wood supply to regional lumber mills and an estimated 510,000 green tons of biomass to wood utilization facilities. This FRB is expected to create 157-238 local forestry-related jobs.
Grant funds will be leveraged to develop a $10 million Phase I Forest Resilience Bond, to support initial implementation of the Stella Project and to provide outreach about this financial model to other National Forests and local stakeholders that can contribute additional funding for forest management. For example, Blue Forest is currently working with the Medford Water Commission to explore and quantify potential benefits to their operations.
“The Rogue Forest Partners welcomes Blue Forest Conservation’s involvement in the Stella Project, one of six Oregon Watershed Enhancement Board Rogue Forest Restoration Initiative projects. This is an innovative approach and financial model that brings leverage and funding to all aspects of restoration–risk reduction, habitat restoration, water quality and forest health. We are very encouraged by this grant award and look forward to working with the Blue Forest Conservation team.” — Terry Fairbanks, Executive Director of Southern Oregon Forest Restoration Collaborative.
The FRB can also be applied to cross-boundary work, helping address the additionally needed restoration on private and non-federally owned forestland. The confidence that projects will be consistently implemented over large landscapes is critical for planning forest management projects as well as for encouraging investment in wood supply industry facilities that can process the merchantable timber and small-diameter material from the forest.
Blue Forest Conservation will be required to generate a project proposal, a summary of financial models and contracts, and annual and final reports, including any wildfire risk reduction, water supply and carbon benefits. Industry involvement in this project includes regional lumber mills and potentially, local biomass power generation facilities.
Benefits to the National Forest System and other forest lands from the Stella Project FRB include the restoration of 44,000 acres, thereby reducing catastrophic wildfire risk on NFS land; to the Medford Water Commission operations, and increased protection from wildfire risk to the communities of Union Creek and Prospect.
A long-term benefit is that investor financing of the upfront costs of restoration activities, paid back with a modest return through collaborative stakeholder participation, ensures the financial resources to implement a project that provides a consistent, reliable source of material for both merchantable timber products and biomass utilization.
The initial pilot FRB success in the state of California has catalyzed the creation of the North Yuba Forest Partnership, a nine-member organization of government agencies, NGOs, and local stakeholders committed to the planning and implementation of forest management across the entire 275,000-acre North Yuba watershed. The ultimate goal of the FRB in this and other regions is to allow the Forest Service to plan more and larger forest restoration projects, having more confidence that the resources for implementation will be available before plans and permits expire.
“We’re pleased to have secured a Wood Innovation Grant to develop the broad strategy for National Forest engagement in the Pacific Northwest. We have access to development funding from the JM Kaplan Foundation and pro bono legal assistance from the Orrick law firm to help develop and review contracts,” said Tessa Maurer, Senior Project Scientist with Blue Forest Conservation. “We look forward to working with local stakeholders and expanding on what we believe is an effective financial mechanism for achieving forest restoration.”