Reducing forest fire risks requires market incentives, free enterprise

January 25, 2019 | By JONATHAN WOOD

Originally published in The Hill, January 25, 2019.

In a rare example of bipartisanship, last week the Democratic-controlled House of Representatives passed two Republican-sponsored bills to increase funding for fire-reduction projects in federal, state and private forests. Although there is heated disagreement over the causes of the recent increase in catastrophic wildfires — is it climate change, federal mismanagement or both? — there is clear consensus on the need to reduce fire risks now, even as we continue to debate long-term solutions.

The need for short-term action is clear. Forest fires are growing larger, hotter and more frequent. In the 1980s and early 1990s, an average of 2.9 million acres burned each year in the United States. Since 2008, the average has skyrocketed to 6.6 million acres. Last year, more than 8.5 million acres burned.

The human toll is the most visible impact of catastrophic wildfires. Last year’s Camp Fire in California, which took 86 lives and caused $16.5 billion in damage, remains seared in our minds. But there are other important, less-visible consequences. Fires destroy habitat for charismatic and endangered species. They degrade water quality, including drinking water sources relied on by neighboring communities, and emit tons of air pollution.

A lack of funds has been a major obstacle to addressing this problem. Thus, the additional $21 million for hazardous fuels-reduction proposed by the House is welcome. But it would not be a complete solution. The U.S. Forest Service reports that it has an 82 million-acre backlog of forest restoration projects. The additional funding sounds like a lot of money, but it’s only 25 cents per acre of the backlog.

A problem of such magnitude likely can’t be solved without expanding the role of markets and free enterprise in funding and performing forest restoration work. Last year, Blue Forest Conservation and World Resource Institute completed funding for the first Forest Resilience Bond, which raises private money to fund public forest restoration work. These investments can be profitable because local communities, water districts, environmental groups and others who benefit from reduced fire risk reimburse the bond’s investors as the project delivers results.

This innovative form of impact investing can bring significant resources to bear on the problem. An article in the Stanford Social Innovation Review reports that the bond has raised $4.6 million for a single 15,000-acre project — a $300-per-acre investment in forest health. This is far greater on a per-acre basis than the federal government is likely to spend. Thus, increasing opportunities for markets to supplement funding for forest health projects is vital to addressing the problem.

However, inadequate funding isn’t the only challenge. Even where a particular project has adequate funding, it can be derailed by bureaucracy and litigation.

For example, the Gallatin National Forest and City of Bozeman, Montana, developed a plan in 2005 for a forest restoration project to reduce the threat wildfire posed to the city’s water supply. For the next six years, the project was tied up in bureaucracy, as the Forest Service thoroughly analyzed the project’s environmental impacts. In 2011, the agency approved the project, based on its benefits to the city’s water supplies, firefighting efforts and forest health. But, as is often the case for forest projects in Montana, the Forest Service was promptly sued for approving the project. Seven years later, the project remains tied up in litigation, with a decision anticipated this year.

Unfortunately, addressing these obstacles is politically more difficult than increasing funding, because criticism of bureaucracy and litigation too often is perceived as criticism of environmental protection. But this reflects a false choice, since red tape can be cut without casting aside environmental values. In fact, blocking reasonable reforms could backfire if it leads to a future Congress authorizing a broad waiver of environmental protections, such as the ones Congress adopted for construction of a border wall.

The challenge is to find a middle ground that balances the need to reduce fire risks while also protecting environmental values. Congress could set standards that streamline these obstacles for projects that achieve certain environmental benchmarks, such as avoiding impacts to endangered species, minimizing road construction and protecting older, larger trees. A bipartisan solution to the obstacles of bureaucracy and litigation would empower forest managers to make responsible stewardship decisions, while maximizing environmental benefits and minimizing environmental costs.