Grant Funds Innovative Pilot to Build Landscape-Scale Resilience in Key California Watershed

The Freshwater Trust (TFT) received its second grant in two years from the U.S. Endowment for Forestry and Communities’ Innovative Finance for National Forests (IFNF) Program. This two-year, $300,000 award will assist TFT and its partners in the Healthy Eldorado Landscape Partnership (HELP) to test a “Watershed Outcomes Bank” pilot that leverages together multiple funding sources to an integrated set of projects that most rapidly improve the resilience of the Cosumnes River watershed. Like many Western U.S. watersheds, the Cosumnes faces more frequent and intense drought, fire, and flooding.

We discussed this project with Michelle Wolfgang, Partnership Coordinator for the USDA Forest Service’s Eldorado National Forest, located between Sacramento and Lake Tahoe in the Sierra Nevada Mountains of California, and Tim Wigington, Vice President of Finance & Policy at TFT.

Where will this pilot take place and why is it important to link forested, agricultural and urban areas of the watershed?

Michelle: The pilot takes place in California’s Cosumnes River watershed, a critical watershed for special status and culturally important wildlife and the last free-flowing river from the west slope of the central Sierra Nevada Mountains. Headwaters of the Cosumnes River originate in the heart of the Eldorado National Forest (ENF) around 7,500 feet elevation. The river flows down and across the Central Valley through farmland and urban areas where it joins the Mokelumne River before flow reaches the Sacramento-San Joaquin Delta. The Cosumnes River watershed occupies around 900 square miles and supports the region’s agriculture, rural-to-urban communities, and sources of drinking water. Unfortunately, in 2021 the Caldor wildfire severely burned the forest here and several areas sustained 100% tree mortality. Restoring and reforesting the Cosumnes headwaters is a high priority for the ENF.

Part of a forest burned by the Caldor Fire near South Lake Tahoe, California. USDA Forest Service photo by Cecilio Ricardo. Public domain.

Tim: The Cosumnes is a compact watershed: forest quickly transitions to agricultural and urban spaces over a short distance, and into the Delta. These “ecoregions” are all connected, and all are feeling the impacts of wildfires, drought, and flooding from accelerating climate change. While the impacts are interrelated, public funds that could help address these impacts are broken up across dozens of programs and given out in small chunks. We want to move away from project-by-project funding and jurisdictional silos, and move toward managing the region as a connected system.

What are you planning to do in this pilot and why are you excited about the work?

Tim: The science supports a large-landscape restoration approach, but our funding and implementation system does not—that is what we are trying to fix through a Watershed Outcomes Bank. Each agency, corporation, and utility has built up its own funding approach with its own complexity. I’m excited to find a way to cut through the complexity and show what is possible when we integrate all the pieces together into a system that can operate at the right scale and speed.

Michelle: My role is to lead the coordination of our partners in HELP, including TFT, and to connect them to the work happening in ENF. I’m excited to see this project reach the pilot stage. Once we’ve tested it in the Cosumnes River watershed, I’ll be thrilled to share the outcomes with others in the region and adapt the outcomes bank for other watersheds. What we learn in the ENF will provide us with a different lens on how to measure success of treatment outcomes on National Forest System lands. By applying this concept, we will be better prepared to optimize and prioritize planning of projects and better equipped to provide desired outcomes for our grantors and our downstream beneficiaries.

Michelle Wolfgang of USDA Forest Service, left, with Erik Ringelberg, regional vice president of The Freshwater Trust, in the Eldorado National Forest. Michelle was recognized with an award for her efforts in building conservation partnerships. Photo by The Freshwater Trust.

Can you describe the ways that data and metrics help build an integrated funding and implementation approach here?

Tim: In 2023, TFT received a feasibility grant from IFNF. That grant allowed us to identify a core set of metrics that serve as a “throughline” between watershed resilience targets, projects, funding, prioritized implementation, and progress tracking. TFT worked with partners to develop a “Solver Tool” that helps identify the ideal portfolio of projects to achieve multiple watershed resilience targets.

The project types that really matter in this watershed include groundwater recharge, on-farm irrigation upgrades, instream and streamside restoration, post-fire forest restoration, and pre-fire forest thinning. For each of these projects, we have identified existing models to quantify increases in water volume, and reductions in sediment, greenhouse gases, flood risk, and fire risk.

We chose these metrics because they cover most project types, have the greatest overlap with major funders, and can be calculated easily with available data and models.

Michelle: Traditionally, our projects across the National Forest System lands have been somewhat fragmented—a bit here and a bit there. We were always considering priorities for resource protection and actively managing the land where we could, but the scarcity of funding and elevated costs has caught up and made us think differently. We are in a transition period now thinking about how to tackle larger, more complex projects and linking those large-scale projects together to achieve landscape-scale restoration. To make significant progress, the ENF and our partners collectively realized we need to accelerate the pace and scale of work. We knew we needed a shared set of agreed-upon metrics that enable us to quantify our success on desired outcomes such as carbon sequestration and sustained water quantity. We need these data and metrics to accurately measure the complexity of land management—the myriad project treatment activities that occur on forest lands from reforestation to prescribed burning to stream restoration.

Looking ahead, this pilot will tell us how to utilize grants and private funding in a geographic focus area to achieve targeted, desired landscape-scale outcomes. Once we have a few projects in place, we anticipate that our efforts will attract other funders who have similar desired objectives.

Soon, we hope to be stitching together large-scale projects to accomplish landscape-scale restoration and resilience.

How did you get to this point in the process? What’s going to be the hardest part about moving from a concept to practice?

Michelle: This pilot is part of a path that all western National Forests are already moving down, whether we have prepared for it or not. The ENF was primed to accept this relatively new and alternative approach to funding. In the Eldorado, we have few remaining unburned acres and have suffered major high-severity wildfires. Wildfires have a place on this landscape—forests of the Sierra Nevada are fire-adapted ecosystems—but we are continuously challenged to outpace climate change and megafires while proactively managing the green forests we have remaining. This pilot will demonstrate how to integrate multiple funders to support proactive, landscape-scale forest land management in the face of continued unprecedented challenges.

Tim: With the feasibility grant, we laid the foundation for the Watershed Outcomes Bank model and identified an optimal structure through which to prioritize efforts, aggregate and administer funds, and help secure financing. We also received critical buy-in and support from the ENF and other partners to drive this effort. Going from concept to reality is always hard, especially because we’re trying to nest this project within a strong ongoing partnership effort that can’t just stop and wait for this work to come online. Knitting together funding from different programs and agencies into a single watershed-wide effort will also be difficult because each program has developed such specific criteria. We are working at the state and national policy level to make it easier, but in the interim, it’s hard work fitting these pieces together when the programs weren’t designed with that goal in mind.

How are the project’s partners organized so that everyone benefits from this approach?

Tim: TFT is working directly with HELP, led by the ENF, to identify projects, quantify costs and benefits, relate to watershed targets and the optimal funding plan, and then deliver leveraged funding to more projects. TFT is working with Quantified Ventures and Blue Forest Conservation on the modeling and financing side of this project. We’re also working with several regional funding sources.

People are used to working in their own lanes, so we’re really focused on building this from the ground up with partners. We’re working out answers to questions such as: What are the mechanics where all partners in a watershed can work together effectively? What is the formal operating agreement we need to allow us to move quickly together?

Michelle: HELP formed in 2021 and received its first multi-million dollar grant in 2023.

It is a unique partnership in that traditional systems are challenged; innovative and creative think tanks are welcomed; and an increasingly diverse set of organizations and individuals are represented here.

We have five workgroups comprised of conservation finance, funding coordination, data, and two key geographies. People are enthusiastic about the work of HELP and this Watershed Outcomes Bank pilot. We all want to see this landscape made more resilient and we’re motivated by the out-of-the-box approach to get the work done.

What outcomes are you building toward and how will they be assessed?

Michelle: I was the kid on the playground who organized all the kids to play together, and I’m still that way—thinking about the future of fire-adapted communities and a fire-resilient landscape for the ENF and beyond. Our holistic, collaborative approach in HELP is changing many people’s minds across California about how we fund the future of landscape-scale resilience.

We are reducing or dissolving the barriers for building a multi-funder effort. It’s protecting or restoring our forest and water resources not only ecologically, but also with positive social and economic outcomes.

We have so many outcomes to look forward to by working together and bridging the current gaps in funding streams like creating jobs and attracting a sustained workforce, generating Tribal co-stewardship opportunities, and contributing to the protection of agriculture, utilities, and infrastructure. By playing together, so to speak, we’re creating a resilient and fire-adapted landscape for everyone.

Tim: On the structural side, the goal here is to demonstrate that this approach can deliver bigger, faster, more efficient results while also helping partners achieve more of what they want. We don’t want this model to replace what people are doing but to unlock everyone’s full potential to do their best work, while providing structural support and connective tissue so that everyone can access more funding and have access to financing. The best way to prove out the mechanics is to deliver something that has been elusive thus far—watershed-scale resilience that helps many people and shows that by simplifying we can still achieve strong, rigorous outcomes.

The United States Endowment for Forestry and Communities is a not-for-profit corporation that works collaboratively with partners in the public and private sectors to advance systemic, transformative and sustainable change for the health and vitality of the nation’s working forests and forest-reliant communities.