1. Page 1 | Confidential Blue Forest Conservation PROADAPT Conference Introduction to the Forest Resilience Bond May 27 th, 2016 Zach Knight Co-Founder and Managing Partner zach@blueforestconservation.com

2. Page 2 | Confidential National Forests in Crisis PROBLEM: OVERGROWN FORESTS 1929Today Overgrowth intensifies drought and wildfire Water quality threatened Hydropower generation severely affected US Forest Service lacks funds to restore land

3. Page 3 | Confidential Multiple BeneficiariesSingle PayerBeneficiaries = Payers Status QuoForest Resilience Bond Water utility Electric utility Water utility Electric utility The Opportunity for Pay for Success Benefits ► Relieves public of upfront financial burden ► Payments on an ex-post basis once proven ► Scales investment in high-impact areas ► Portfolio diversification opportunity Pay for Success Facilitates Collaboration with Private Sector What is Pay for Success? Private investors provide upfront capital and stakeholders make contracted repayments based on pre-determined outcomes only after benefits are measured and proven US Forest Service

4. Page 4 | Confidential The Forest Resilience Bond Structure Funds Forest Resilience Bond Funds Interest Funds Residual CF Water Quality/Resiliency Benefits Accrue to Water and Electric Utilities Fire Suppression Benefits Accrue to USFS and State Debt Investors Equity Investors Forest Restoration Evaluation Platform Contracted cash flows as determined by evaluator

5. Page 5 | Confidential Advantages of Private Capital Delays repayment by beneficiaries, allowing for cost sharing once benefits are proven Opportunity to influence policy by demonstrating that this work can be successful Preventative investments not prioritized in current funding structure Potential to tap into billions of dollars Budget- Constrained USFS Enables Cost Sharing Ex- Post Potential to Set Precedent Vast, Underutilized Resources

6. Page 6 | Confidential The Forest Resilience Bond BENEFITS OF THE FOREST RESILIENCE BOND Sizable Investment Opportunity Annual Cash Flows, Real Fixed Income Asset Multiple High Quality Payers, Robust Economics Ability to Contract on Outputs or Outcomes US Market: $41 Billion (58M acres) IMPACT Water Quantity & Quality Air Quality & Emissions Fire Severity Job Creation Hydropower Generation 2014 USFS Restoration CA Market