UC Berkeley

The increasing frequency and severity of wildfire in California, exacerbated by climate change and historical forest management practices, underscore a critical need for increased forest management which reduces the risk of high severity fire. Currently, over $100 billion is needed to meet federal forest management goals outlined in the U.S. Forest Service Wildfire Crisis Strategy, but total, nonrecurring public funding is approximately $5 billion. To help fill this gap, state and federal agencies explicitly call for public-private partnerships to increase the diversity of funding sources. In this dissertation I evaluate the potential of carbon finance to fund forest management via the carbon benefits from utilizing low-value biomass and by monetizing increased forest carbon stocks from treatments which restore forest resilience. This dissertation helps to advance the field of biomass utilization by exploring ways to increase investment in biomass-based products and exploring the carbon benefits of a fire resilient forest structure, both novel contributions to the literature.

I employ a comprehensive set of methodological frameworks that integrate ecological, economic, and policy analyses to understand how carbon finance can support forest restoration goals in California. The methods used here include discounted cash flow analysis, life cycle assessment, and forest growth models. I reveal how forest management aimed at restoring fire resilience and biomass utilization can contribute to climate objectives. I further show that carbon revenue from biomass utilization and avoided wildfire emissions can contribute significant funding to forest restoration in the Sierra Nevada Mountains.

Themes emerging from this dissertation include: 1) The clear carbon benefits of biomass utilization and the pivotal role it can play in scaling forest restoration and closing funding gaps while generating profitable returns to investors. Fuels made from biomass have an Internal Rate of Return (IRR) of 19% and nonfuel products have an IRR of 13% in the baseline scenario, showing the potential for profitable investment in products utilizing low-value forest biomass. 2) Biochar production could turn low-value biomass into approximately 70 million carbon credits annually, provide IRRs as high as 10 – 30% to investors, and eliminate costs associated with pile-burning. While biochar has lower carbon benefits than other biomass-based products like hydrogen, biochar production is technologically mature and requires low capital expenditures, which can help to build biomass supply chains to unlock higher carbon benefit biomass utilization options. 3) The carbon benefits of restoring resilience and biomass utilization can pay for forest restoration in many instances, providing up to $4,000 per acre. However, to fully unlock markets for low-carbon intensity biomass-based commodities from low-value forest biomass, policy support for low carbon fuels and carbon markets will be crucial. Similarly, private investment will need rigorous predictive tools to forecast revenue from carbon markets, tolls which will need to be iteratively developed as the market evolves. This dissertation explores the predictive tools necessary to estimate the impact of various policy and market scenarios on financial returns. Through this work, I hope to advance our ability to predict, and generate revenue from, the carbon benefits of forest restoration.