How CalFire Is Spending Recent Forest Health Funds

In this web post, we provide a summary of how the California Department of Forestry and Fire Protection (CalFire) is spending Greenhouse Gas Reduction Fund (GGRF) dollars (cap-and-trade auction revenue) provided in the 2017-18 budget package. Our summary focuses primarily on CalFire’s Forest Health Program, as this is an expanded effort and was a particular point of emphasis during legislative discussions. We conclude by identifying issues for the Legislature to consider as it oversees and guides future expenditures of forest health funding.

Background

State’s Forests Are in Poor Condition, Increasing Risk of Severe Wildfires. Roughly one-third of California is forested, and these forests provide critical air, water, wildlife, climate, and recreational benefits. However, a combination of factors have resulted in poor conditions across these forests, including excessive vegetation density and an overabundance of small trees and brush. Such conditions have contributed to more prevalent and severe wildfires and unprecedented tree mortality in recent years, and experts are concerned these trends will continue if steps are not taken to significantly improve the health of the state’s forests. (For additional discussion of these issues and our recommendations for how the Legislature can respond, please see our report from April 2018, Improving California’s Forest and Watershed Management.)

State Has Established Ambitious Goals for Actions to Improve Forest Conditions. In May 2018, Governor Brown’s administration released the California Forest Carbon Plan, which provided forest-related carbon storage and emission estimates, as well as strategies to improve forest management and resilience. This plan laid out the administration’s aspiration to increase the rate of forest restoration and fuels treatment—including mechanical thinning and prescribed fire—on nonfederal forest lands from the recent average of 17,500 acres per year to 35,000 acres per year by 2020, and to 60,000 acres per year by 2030. The plan also stated a goal of supporting federal efforts to double the current rate of “health and resiliency treatments” on U.S. Forest Service lands in California from 250,000 acres per year to 500,000 acres per year by 2020.

Summary of CalFire’s 2017-18 GGRF Funding

State Provided Significant Funding for Improving Forest Conditions in 2017-18. In response to forest conditions and needs, the 2017-18 state budget included a significant appropriation for activities to improve the health of the state’s forests and reduce the potential for severe wildfires. Specifically, the Legislature appropriated $195 million in GGRF funds to CalFire for forest health and fire prevention activities. This was a notable increase from earlier GGRF appropriations for similar purposes ($25 million in 2014-15 and $40 million in 2016-17). The Legislature identified GGRF as an appropriate funding source for these forest management activities because preventing severe wildfires helps avoid potential emission of greenhouse gases (GHGs), and because healthy forests sequester more carbon than those in poor conditions. (The 2017-18 budget package provided additional GGRF for other forest-related activities—$20 million to CalFire for its Urban and Community Forestry Program and $5 million to the California Conservation Corps to conduct forest health and urban forestry activities.)

CalFire Allocated Forest Management Funds Across Various Programs and Activities. The Legislature granted CalFire discretion over how to divide the $195 million for forest management across its various programs and initiatives. As shown in Figure 1, the department decided to allocate $171 million as local assistance funding through competitive grants across two programs—$91.5 million for Forest Health and $79.7 million for Fire Prevention. CalFire is using most of the remaining $24 million for state-level activities, including grant administration and technical assistance, data collection, public education, and equipment.

Differences in Grant Awards Reflect Distinction Between Programs’ Typical Projects. Figure 1 also displays information about the funding categories within each grant program and the sizes of the grants CalFire awarded. As shown, roughly the same amount of total funding was given out via grants in the two largest funding categories—forest health projects through the Forest Health Program ($78 million) and fuel reduction projects through the Fire Prevention Program ($75 million). For forest health, however, the department gave larger amounts of funding to fewer grantees (17 grants with an average size of $4.6 million), compared to fuel reduction for which it awarded smaller grants to a larger number of recipients (114 grants with an average size of $700,000). This reflects the difference in size and complexity of the projects to be undertaken by grantees across these two programs. Specifically, as discussed below, forest health projects typically cover tens of thousands of acres and could include multiple types of forest “treatments” like forest thinning (tree removal), prescribed fire, and/or reforestation (tree planting). Such projects typically have goals of both reducing fire risk and improving the ecological functions of the land (such as carbon storage, quality of habitat, and water supply). In contrast, fuel reduction grants focus on much smaller areas around residential communities and typically are primarily intended to reduce the intensity and spread of wildfire. Such projects include creating defensible space around homes and clearing a strip of trees to serve as a “fuel break” that might slow a fire from spreading.

Because it represents the state’s most significant expenditure towards improving forest conditions, throughout the rest of this web post we provide additional detail on CalFire’s Forest Health Program spending.

CalFire’s Criteria for Prioritizing Forest Health Program Spending

CalFire Had to Prioritize Certain Projects Over Others. As shown in Figure 1—and described in this spreadsheet on the CalFire website—in 2017-18 CalFire awarded grants for 22 Forest Health Program projects, totaling $91.5 million. (While CalFire has committed funds to these projects, most funds will not be paid until after the projects have been completed and the department has confirmed that grantees met requirements and completed planned activities.) The department, however, initially received 72 applications for forest health and forest legacy projects, requesting a total of $330 million. Because demand exceeded available funding, CalFire developed a number of criteria to prioritize among Forest Health Program applications. The criteria considered by CalFire included:

• GHG Net Benefits. Greenhouse gas benefits were clearly demonstrated based on a quantification methodology developed by the California Air Resources Board.

• Disadvantaged Community Benefit. The project provided direct, meaningful, and assured benefits to a disadvantaged community and/or a low-income community.

• Long-Term Forest Management Goals. The landowners committed to practice uneven-age forest management pursuant to a state-approved plan and to maintain a diverse mix of age, size, and species of trees within the project area.

• History and References. The applicant had demonstrated forest management experience with similar large landscape level projects, and demonstrated a high potential for completing the project.

• Project Readiness. The project was ready to implement with legal documents (such as required environmental reviews) completed.

In conversations with CalFire, the department indicated that the latter two criteria were particularly important in their grant decision-making process given the relatively short time period available for funds to be encumbered (two years) and expended (two additional years). The program’s grant criteria also emphasized that projects focus on large landscapes and seek to form partnerships across multiple parcels to increase a project’s size and maximize its benefits.

CalFire Made Small Modifications to Grant Criteria for 2018-19. The Legislature followed the significant 2017-18 funding increase with another large GGRF appropriation for CalFire to undertake forest management activities in 2018-19—$223 million, including $160 million specifically for forest health and fire prevention activities. In general, CalFire plans to use the same criteria from 2017-18 when it evaluates applications for 2018-19 Forest Health Program grant funding. The department made some minor modifications to the program for the current year, however, including adding an explicit application scoring system and making funding available for the costs of planning—not just implementing—projects. Additionally, for the current-year grant cycle CalFire has explicitly identified “priority landscapes” where there is a demonstrated need for treatment and projects will have a significant benefit. Applicants can gain priority points for proposing projects on these lands. The department also indicates that in the coming years it will increasingly try to use funded projects from prior years as “anchor points” and seek to fund additional projects that are geographically close or connected to forestlands that have already received treatments.

Overview of 2017-18 Forest Health Spending

Projects Funded on Both State Responsibility Area (SRA) and Federal Lands. Program guidelines required that Forest Health Program projects either be located on or provide a benefit to SRA land. The SRA consists of 13.2 million acres of forestland—mostly privately owned—on which CalFire is responsible for preventing and suppressing wildfires. (About 40 percent of the 33 million acres of forestland in California is part of the SRA, with most of the remainder owned by and under the responsibility of the federal government.) CalFire allocated about half (52 percent) of the 2017-18 Forest Health Program funding for projects on forestlands that are part of the SRA, with nearly all of the balance allocated for projects on federally owned land. Improving the health of neighboring federal forestlands can reduce the threat of wildfire on—and thereby provide benefit to—adjacent SRA lands.

Grants Awarded for Multiple Counties and Types of Organizations. The 22 funded Forest Health Program projects are located in portions of 21 different counties, with certain counties being the location for multiple projects. The counties containing at least a portion of three or more projects include Humboldt (six, including four Forest Legacy easement projects); Placer (five); and Nevada, Plumas, and Tuolumne (each with three). While many of the funded projects represent collaborative efforts of multiple types of partner organizations, a nongovernmental organization—such as a land trust or foundation—is the most typical type of lead applicant and grant manager (14 out of the 22 grants). Other types of lead applicants are local governments such as cities, counties, and conservation districts (five), state conservancies (two), one private landowner, and one university.

Four Grants Are Part of One Large Regional Restoration Program. Included within these totals is a large project that received four separate grants but will be coordinated as part of one collaborative effort, called the Tahoe-Central Sierra Initiative. This initiative is a partnership between the Sierra Nevada Conservancy and California Tahoe Conservancy, the U.S. Forest Service, The Nature Conservancy, and several other public and private entities. The group states that its mission is to “accelerate regional scale forest and watershed restoration through ecologically based management actions,” including by “leveraging lessons learned through pilot projects.” Combined, these four coordinated projects represent $27.5 million (30 percent) of the total 2017-18 Forest Health Program funding. The projects plan to treat 23,472 acres of forestland in the region around Lake Tahoe, primarily in the federally owned Tahoe and El Dorado National Forests.

Funded Projects Include Various Types of Treatments. Forest managers can undertake several types of activities or treatments to reduce forest density, remove dead and diseased trees, reduce the risk of wildfire, and improve the benefits that forests naturally provide. Figure 2 summarizes the types of activities and number of acres planned for improving forest conditions using the 2017-18 Forest Health Program funds. (The totals shown reflect the planned acres to be treated based on grant applications; CalFire will confirm the amount of acres actually treated after projects are implemented and before disbursing funding.) As shown, grantees plan to undertake a combination of activities, with the most prevalent—covering the most acres—being mechanical or hand thinning, which typically entails clearing out small trees and brush. Across the 22 funded projects, the average treatment size per project is about 6,600 acres. The largest project—called “My Sierra Woods,” for which project partners plan to conduct outreach to over 10,000 nonindustrial private landowners across nine counties and engage them in forest restoration—hopes to treat 34,000 acres. In total, grantees plan to undertake treatments on about 145,000 acres, which comprises about 0.4 percent of total forestland in the state.

Issues for Legislative Oversight

CalFire’s Initial Approach to Administering Forest Health Funding Appears Reasonable . . . We find CalFire’s approach to administering this first round of substantial forest health funding to be reasonable, for three key reasons:

• First, the department has developed clearly defined, pertinent, and practical prioritization criteria for awarding its grants. These include an emphasis on projects’ likely benefits and whether the projects have a realistic likelihood of being completed as proposed.

• Second, we find the criteria the department developed to be consistent with the legislative intent expressed for the program—in particular, the focus on reducing GHGs corresponding to the use of GGRF.

• Third, we believe CalFire’s emphasis on encouraging and selecting large-scale, landscape-level projects (rather than smaller, more geographically isolated projects) makes sense and increases the likelihood of preventing severe wildfires from spreading.

. . . . However Continued Legislative Oversight Is Essential. While CalFire’s initial actions are encouraging, implementation of the Forest Health Program is still in its early stages. The Legislature will want to closely supervise how program administration and activities proceed in the coming months and years to be sure the state is meeting its objectives for reducing GHG emissions and wildfire risk. Moreover, analyzing program implementation and outcomes from the 2017-18 expenditures can help inform how the Legislature structures and oversees future appropriations. As noted earlier, the 2018-19 budget package included an additional $160 million in GGRF for forest health and fire prevention activities. In addition, recent legislation expressed intent to provide $200 million in GGRF annually for forest health and fire prevention activities over the next five years beginning in 2019-20. The Legislature will want to ensure these funds are spent effectively. How CalFire allocates future funding to build on initial projects and maximize cumulative benefits will be important—disconnected, geographically isolated projects will not yield as many wildfire avoidance, water supply, or ecosystem benefits. The extent of the poor conditions across the state’s forests is significant enough that the state will need a strategic and targeted approach to make any measurable headway in their improvement, even with the level of expenditures currently being discussed. In our recent report, we recommended that the Legislature require that the administration clearly articulate how forest health spending will be prioritized to make meaningful progress on achieving statewide goals.

Future Oversight Should Focus on Several Key Questions. To help the Legislature in its oversight role, we recommend requesting that CalFire provide periodic reports—written and/or through oversight hearings—to address the following questions. Depending on how the department responds over the coming months and years, the Legislature may wish to take additional action to clarify its objectives or address problems.

• Are Funded Projects Meeting Promised Targets? Did projects actually treat the amount of acres projected in their grant applications? If not, why not?

• Are Challenges Arising That Merit Legislative Intervention? Are CalFire or project proponents encountering barriers in effectively using funding or implementing projects? Could any of these barriers be resolved through legislation? For example, is four years to encumber and expend funding sufficient to undertake large-scale projects?

• What Strategies Is CalFire Using to Ensure Funding Achieves Maximum Benefits? Has CalFire developed a multiyear strategic plan or approach to guide its use of GGRF funding to improve forest health? How will the department prioritize the use of future funding to maximize benefits and cost-effectiveness? Is the department selecting projects that are contiguous or geographically close to those that were funded previously? What types of potential benefits are being given greatest priority when deciding which projects to fund (for example, fire risk to nearby communities, amount of GHG reductions, or proximity to a parcel that has already been treated)?

• What Proactive Steps Is CalFire Taking to Ensure Strategic Goals Are Met? Is CalFire depending solely on grant applications for Forest Health Program projects, or is it soliciting and initiating projects? How is the department ensuring that projects are being undertaken in the highest priority regions and parcels? What can and should the state do if no proposals are submitted to treat high priority areas?

• Does Sufficient Local Capacity Exist for Undertaking and Expanding Forest Health Activities to Meet the State’s Goals? Do high-priority forested regions around the state contain a sufficient number of local entities who are adequately prepared to plan, propose, undertake, and complete forest health and fire prevention projects? Are there “capacity gaps” in particular regions or for implementing particular types of activities? If so, are there steps the state can take to address such gaps and help build local capacity?

• What Criteria Is CalFire Using to Allocate Funding Across Its Various Programs and Initiatives? How is CalFire determining the best division of funding between the Forest Health and Fire Prevention Programs and between forest health and forest legacy projects within the Forest Health Program? Do these decision-making criteria reflect legislative priorities? Does the Legislature want to be more explicit in appropriating funding for specific programs or efforts?

• How Will the State Measure Whether Its Efforts Are Yielding Success? What types of metrics can the state use to monitor the effectiveness of its expenditures to improve forest health? How can the state tell if it is funding projects in the highest impact locations and using the most effective types of forest treatments? How can the state assess the degree to which it is achieving its goals for GHG reductions, wildfire avoidance, and improved ecological function? Is CalFire collecting the data needed to make such determinations?