On the Inflation Reduction Act of 2022

Conservation finance is one component of the paradigm shift needed to increase the pace and scale of restoration to support the agency and partners to meet the ambitious goals set forth in the Wildfire Crisis Strategy.

Written by: Mac Cloyes, Chief of Staff & Policy Director

The Inflation Reduction Act (IRA) is the single largest federal investment in the climate in US history. The focus of this post is on forestry programs in Subtitle D of Title II, which appropriates $5 billion to the Forest Service for programs including hazardous fuels reduction on National Forest System (NFS) lands in the wildland-urban interface (WUI), State and Private Forestry Landscape-Scale Restoration, Urban and Community Forestry, and the Forest Legacy Program.

The IRA passed the Senate on August 7th, the House on August 12th, and was signed by the President on August 16th. This post provides a high-level summary of the forestry subtitle and the role conservation finance plays in the implementation of US Forest Service forest restoration priorities. Conservation finance is one component of the paradigm shift needed to meet the ambitious goals set by the Wildfire Crisis Strategy, while leveraging non-federal investment, increasing human resource capacity, and increasing collaboration around high-priority restoration projects.

By the Numbers: Title II, Subtitle D—Forestry

SEC. 23001. NATIONAL FOREST SYSTEM RESTORATION AND FUELS REDUCTION PROJECTS

  • $1.8b for hazardous fuels management on NFS lands in the WUI

  • $200mm for vegetation management on NFS lands carried out in accordance with a plan developed under the Water Source Protection Program or Watershed Condition Framework

  • $100mm for environmental planning (National Environmental Policy Act of 1969)

  • $50mm for old growth and mature forest protection on NFS lands

SEC. 23002. COMPETITIVE GRANTS FOR NON-FEDERAL FOREST LANDOWNERS

  • $150mm for competitive grants under State and Private Forestry landscape-scale restoration program to carry our climate mitigation or forest resilience practices with underserved landowners

  • $150mm for competitive grants under State and Private Forestry landscape-scale restoration program to support the participation of underserved landowners in emerging markets for climate mitigation and forest resilience

  • $100mm for State and Private Forestry landscape-scale restoration program to support the participation of private landowners who own less than 2,500 in emerging private markets for climate mitigation and forest resilience

  • $50mm for State and Private Forestry landscape-scale restoration program for implementation of forest practices for carbon and sequestration and storage

  • $100mm for Wood Innovation Grant program

SEC. 23003. STATE AND PRIVATE FORESTRY CONSERVA20 TION PROGRAMS.

  • $700mm for Forest Legacy program

  • $1.5b for Urban and Community Forestry program for urban tree planting

SEC. 23005. ADMINISTRATIVE COSTS

  • $100mm for administrative costs for implementation of Subtitle D (above)

The Need For Conservation Finance

The Inflation Reduction Act provides about $2 billion for restoration on NFS lands and the Infrastructure Investment and Jobs Act provides approximately $3 billion. According to the Wildfire Crisis Strategy,  the agency must treat up to an additional 20 million acres on NFS lands and 30 million acres across other ownerships across the West over the next decade to reduce the risk of catastrophic wildfire. Using a conservative $1,000-$2,000/acre estimate (we have seen costs exceed $5,000/acre in some areas), the strategy represents a $50-$100 billion need. This historic investment is a down payment on the total need. However, as Blue Forest Research Advisor Dr. Patrick Bigger explained in a recent article, “You can throw all the money you want at some of these issues but if you don’t have the workforce and you don’t have the capacity to get things done, it doesn’t do anything.” Tools like conservation finance that leverage non-federal funding and bring much needed human resource capacity to this work are integral to successful implementation.

My colleague Jeannie Davidson, Director of Project Development, and I have previously discussed the role of conservation finance when the Forest Service now has unprecedented funding levels going toward forest restoration. Conservation finance can help address three common challenges we see: it provides the mechanism to enable folks to participate in landscape-scale projects; enables partners to build capacity by removing administrative barriers; helps develop a local restoration workforce, and supports the utilization of biomass. To summarize our previous explanation:

Conservation finance not only brings additional financial resources, it brings partner capacity, and collaboration to these projects. Public-private partnerships, and the Forest Resilience Bond model specifically, position the Forest Service and partners to meet the ambitious goals of the Wildfire Crisis Strategy by leveraging non-federal resources to get more work completed with limited federal funding. The FRB can also bring flexible funding to a landscape, enabling partners to respond to changing conditions and invest in best practices, without being constrained by programmatically defined state or federal funding. For example, in the Yuba I FRB, the National Forest Foundation leveraged this flexibility to transport the “wood waste” from fuels reduction to renewable woody biomass electrical generation facilities, which avoided pile burning and generated over 8,000 MWh of electricity.

Congressional Interest in Conservation Finance

A final point worth highlighting is that Congress is supportive of the Forest Service continuing to build on their success deploying conservation finance on NFS lands. The report accompanying the Fiscal Year 2023 House Interior Appropriations Subcommittee states:

Conservation Finance.—The Committee applauds the Forest Service’s innovative application of conservation finance models to reduce the risk of catastrophic wildfire, improve watershed health, and improve recreation infrastructure on National Forest System lands. The Committee encourages the Service to continue conservation finance efforts to leverage non-Federal investments in outcome-focused projects and promote collaboration with public and private sector partners to accelerate the pace and scale of forest management activities to support implementation of Public Law 116–152 [Great American Outdoors Act], Public Law 117–58 [Infrastructure Investment and Jobs Act], and the Service’s Confronting The Wildfire Crisis: A Strategy for Protecting Communities and Improving Resilience in America’s Forests.

Closing Thoughts

The wildfire crisis is one of the greatest land management challenges of our time. Traditional funding models that rely exclusively on public funding will not be sufficient to address this challenge fast enough. Conservation finance is one component of the paradigm shift needed to increase the pace and scale of restoration to support the agency and partners to meet the ambitious goals set forth in the Wildfire Crisis Strategy.

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