Wildfires & Forestland Investing = Risk or Opportunity?
2020 was a catastrophic year for wildfires in the western United States. During 2020 over 58,250 wildfires burned 10.3 million acres across the U.S., the most acreage impacted in a year[i] and the most active fire year on record for the West Coast.[ii] Forests represent a significant natural resource to combat climate change, protect engendered species, provide drinking water to local communities and provide employment opportunities to often economically distressed rural economies. However, after such a devastating year for western forests, do forestland investments now represent a risk or an opportunity?
Forests Role in Climate Mitigation
Forests provide us with a powerful solution to mitigate climate change. As trees grow, they absorb carbon dioxide through photosynthesis, releasing oxygen and storing carbon in their trunks, branches, leaves and roots. Forests currently absorb 30% of all CO2 emissions, however increasing natural forest regrowth presents the opportunity to increase forests’ capacity to sequester CO2 by an additional 23%.[iii] For example, in Oregon, net carbon sequestration from forests offset about half of the fossil fuel emissions in the state.[iv] One widely cited study estimates that forests and other natural ecosystems could provide more than one-third of the total CO2 reductions required to keep global warming below 2 degrees C through 2030.[v] This requires, however, that forests be protected and sustainably managed to reduce degradation and to reduce the incidence of catastrophic fires.
How Climate-Smart Forestry Increases Carbon & Reduces Fire Risk:
Fortunately, there are significant actions forestland managers can take to reduce catastrophic fires and significantly increase the carbon that forests sequester. Improving forest management through the implementation of climate-smart forestry approaches is one of the most economical, low-risk methods of carbon sequestration. A recent analysis concluded climate-smart forestry could increase carbon stores by 30%, on average, in managed forests in the Pacific Northwest.[vi] EFM has been practicing climate-smart forestry since its inception in 2005, including extending rotations (the age when trees are cut), retaining trees in harvest units, protecting trees in ecologically sensitive areas (e.g. along streams), and restoring degraded forests. By using conservation finance tools, retained trees can be monetized for investors through carbon sales, conservation easements and other mechanisms, creating a win for climate, forests and investors.
Climate change will cause more extreme weather conditions that will result in prolonged droughts and drier conditions that can lead to more intense wildfires. Climate-smart forestry activities can help mitigate and adapt to these new climatic conditions by including the following practices:
- Planting native tree species that are suitable for a sites current and projected future climate and disturbance regimes (fire, wind) and that help build and maintain resilience amidst these changes.
- Managing forests to promote water storage and sustainable release within and from soils to ensure downstream aquatic ecosystem and human uses are supplied.
- In drier, fire prone forests (e.g. ponderosa pine) thinning forests to densities which achieve optimum growth and vitality while creating stand structure to resist high severity fire. Practices that reduce woody fuels (shrubs, branches, litter) are important.
- Also, in drier landscapes create and maintain shaded fuel breaks (long strips along roads and ridges where trees have been thinned and ground and ladder fuels reduced).
Why Invest in Climate-Smart Forestry Strategies:
Climate-smart forestry is an innovative approach to forestland investment and management that monetizes the full attributes of the forest, not just the timber aspect, while increasing the forests’ biodiversity, resilience and carbon storage capability. There is a growing public recognition that natural, intact forest ecosystems across the globe need significant protection and investment in the face of climate change. However current natural climate solutions, including strategies such as EFM’s climate-smart forestry, receive only 0.8% of public and private climate financing, despite offering roughly 37% of potential mitigation needed through 2030 to limit climate warming below 2 degrees centigrade.[vii].
The forests in the western U.S. are a nationally significant carbon sink where over 9 billion tons of carbon are stored, making this the largest unpriced terrestrial sink in the U.S. The species that grow here are known to sequester more carbon per acre, for a longer period of time than other forest ecosystems globally. Investors and funders are recognizing the role of both public and private forests in tackling climate change and efforts are underway to price carbon, fund forest restoration, reduce fire-risk and reduce forestland conversion. These efforts will continue to create new sources of revenue for landowners and investors. We believe that the carbon-rich western forests will increasingly become more valuable for their carbon storage capacity in a carbon-constrained future.
The extreme and unusual fires in 2020 highlight the importance of EFM’s dedication to managing forests for climate, water, biodiversity and to increase fire resilience. Our forest management approach not only results in increased carbon storage, but also more productive forests and reduced long-term risk of fire and disease. EFM’s improved forest management strategies results in a greater drawdown of carbon into soil and forests, thereby reversing the buildup of greenhouse gases in our atmosphere. We need these forests to absorb carbon and mitigate climate change and EFM is dedicated to continuing to transition more properties to climate-smart forestry that we believe will result in tangible benefits for our investors, the landscapes and for the communities in which we invest.