Do investments in wildfire risk reduction lead to downstream watershed service outcomes? An integrated wildfire-erosion-economic analysis of return on investment from fuel treatments in Colorado

Large, severe wildfires negatively impact forested watersheds in the Western United States and jeopardize critical ecosystem services. Specifically, severe wildfires increase overland flow and runoff that contains sediment and debris, and cause other natural hazards such as floods. High erosion from burned watersheds can fill water supply reservoirs and clog water filtration systems, which has direct costs to water utilities in the form of increased water treatment costs and damage to infrastructure. With increasing wildfire risk due to global climate change and other factors, municipal water providers and users have been investing in management practices to reduce high-severity wildfire risk and increase source water security. In this research we integrate wildfire and erosion prediction models to estimate the return on investment from wildfire fuel treatments in the Upper South Platte watershed, southwest of Denver, Colorado. Denver Water and the U.S. Forest Service created the Forest-To-Faucets Partnership, one of the first payments for watershed services (PWS) programs in the United States. To date they have spent more than $30 million in the Upper South Platte to restore forests and conduct fuel reduction work across landownerships. However, due to the lack of appropriate analytical tools, it is still unclear what returns are being achieved with these investments, aside from the total number of acres treated. In this analysis we consider three treatment scenarios - current fuel treatment investments, a series of investments based on prioritization criteria, and investments based on accessibility - and model potential burn probability, fire severity and erosion. We then estimate the economic benefits of avoiding runoff using past expenditures by Denver Water and compare these to treatment costs. This research directly informs management practices in the Upper South Platte watershed and provides a framework that can inform decisions to optimize location, size, and type of wildfire treatments that maximize financial returns on investments, enhancing the resilience of forested watersheds to fire risk. More broadly, this project illustrates the evolution of PWS programs towards a more intensive analytical approach to estimating return on investments by linking ecological and economic outcomes.