Developed by Blue Forest Conservation, the Forest Resilience Bond (FRB) is a multi-stakeholder model that uses upfront investment from private and philanthropic investors to fund forest restoration activities. Beneficiaries, including public agencies and state utilities, reimburse investors with principal and returns following project completion. By drawing on private investment capital, the FRB model aims to increase the pace and scale of restoration activities across the western U.S.

The first pilot project (the Yuba FRB) was launched in 2018 on the Tahoe National Forest. The project benefits from concessional capital provided by philanthropic funders to mobilize commercial private capital. In turn, paying beneficiaries such as the U.S. Forest Service and Yuba Water Agency will repay investors for completion of work. The FRB model and pilot project provide several useful insights for structuring or investing in conservation finance, including:

- A patient project sponsor is crucial to the success of innovative and bespoke blended finance models
- Pilot transactions are time-intensive and costly but can play an “icebreaker” role in the market
- Pay-for-performance metrics are not always appropriate or necessary
- Concessional capital providers do not need to be subordinate to be catalytic
- Blended finance is a valuable structuring tool in developed markets
- Blended finance can pave the way for public agencies to finance innovative ways to finance projects


The Forest Resilience Bond Case Study

Authored by Convergence