#11: What Should You Do When The Fire Starts to Burn? (Pt.1)

Wildfires can now spread at the speed of a football field every second. How does this affect you, your assets and economic wellbeing, and what technology responses have been devised to fight back?

PRESSED FOR TIME?

Over the next three issues, we’re going to talk about fire. Fire has taunted and terrified the human experience since our days in the cave, but the problem now is we have more assets to protect, our vulnerabilities are spread out, and we have less time to act. We’re never really taught in school how a forest cycle works, but even the basics helps us to understand why climate change is a paradigm shifter, and why living in any tranquil wilderness is going to have new risks for the foreseeable future.

Oh, and even if you live in a city, this still affects you because of the way the market has to cross-subsidise risk.

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Welcome to the first in a three-part series on fire. A little counterintuitively, we’re going to do things in reverse:

  • The first issue will start at the end, and examine what happens after the fire has burned. How do forests regenerate, and why does this matter so much in how we respond and innovate?

  • The second issue will look at the $260 billion global carbon offsets market, and why companies like Amazon and Microsoft are buying up carbon credits from forestry entities. Can money be made by ordinary investors like you and I? Is this a functioning market, and what potential exists for fraud and greenwashing?

  • In the third and final issue, we’ll look at the uncomfortable future ahead for people who live in what’s known as the urban-wildlife interface (UWI). How will they get insurance, how do they flee fires and rebuild, and what will their homes be worth if no one wants to live in these locations afterwards?

BUT LET’S START WITH DESSERT.

As we’re working backwards, let’s start with a dessert metaphor.

Imagine a creme brûlée.

Notice how a perfect creme brûlée has that light burned crust on the top? That is basically the equivalent of nature’s ideal fire. We’ll return to this analogy shortly.

Fires need three ingredients: fuel, heat and oxygen. In a forest fire, the heat typically comes from lightning, an out of control camp fire, arson, or a falling transmission line. The oxygen is available everywhere as outdoor fires have an abundance of wind. And the fuel is the brushes and shrubs along the forest floor, that eventually reach midsized trees and jump to treetops.

Here’s four facts with no political leaning, which you might not know or are helpful to restate:

  • Lightning strikes the Earth over 100,000 times a day. Of these, 10-20% cause a fire

  • Man-made causes such as arson or plain carelessness (like smoking in forested areas or improperly extinguishing campfires) by individuals is the biggest cause of wildfires in the U.S. More than four out of every five wildfires are caused by people.

  • Forest management practices have definitely played a role in letting fuel build up in some areas, BUT:

  • Climate change and the increasing warming of air temperatures is a major and undeniable contributor to a new terrifying scale of fire

Many ecosystems benefit from periodic fires, because they clear out dead organic material—and some plant and animal populations require the benefits fire brings to survive and reproduce.

NATURE IS VERY COOL.

Here’s what else happens in good fires: nature goes to work in very cool ways. In the conifer-rich forests of western North America, large pines stretch up for sunlight while their pine cones fall to the ground, pitting saplings against one another as they fight for more light on the forest floor. As tall pines act like an umbrella over time, annual cones (below) have a problem: they don’t have any more light to grow.

These trees have adapted to this problem by growing two types of cones. A second cone, known as a serotinous cone, needs an environmental trigger to free their seeds. These serotinous cones are like time capsules, produced in their thousands by the conifers, and stay undamaged on the tree for decades. What causes the cones to pop open? Fire-like temperatures. Once the temperature passes 46.1C (115 F), serotinous cones open and carry mi

After the fire, carbon-rich soils and an open, sunlit landscape help the same pine seeds germinate quickly and sprout in abundance. Now let’s return to the creme brûlée analogy.

But what’s the key part of a good fire? The majority of the creme brûlée remains gooey. Seeds are stored, and the soil sustains its capacity to regenerate.

A bad (or high severity) fire is where the creme brûlée is burned right through. And this is becoming a more common event.

GO WEST..

There are many places we could examine to illustrate this, but California (CA) is easiest because it’s fire season, and it has a $3.2 trillion economy larger than India. What happens in the coming years and decades in CA has the potential to affect the global economy in many ‘butterfly effect’ ways.

The above map shows the perimeters of all fires recorded by Cal Fire in the last hundred years. On October 4th, 2020, Tom Porter, the California State Fire Chief told 60 Minutes here in the US: ‘every acre in California can and will burn some day.’ And the below chart shows cumulative fire detections across California, Oregon and Washington.

2020 was bad for California, and 2021 is shaping up to be worse. Why? The months of the year when a fire can burn are expanding. An early, warm spring can jump-start a summer drought by extending the season of heat and growth, increasing the amount of water vapour that is shed by plant leaves or that evaporates directly from soil. Lower soil moisture, in turn, can feed back into the local warming cycle and intensify it, since evaporating moisture usually takes up a lot of the energy the sun beams down. When there’s no moisture left to evaporate, the soil or vegetation, dead and alive, absorbs that heat instead—feeding back into the drying-out process that increases fire risk.

HOW BAD IS A MODERN DAY FIRE? LOOK AT THE NUMBERS…

To give a broad recap of how bad things have been, here’s just a few statistics for context:

  • The 2018 Camp Fire consumed 10,000 acres in about 90 minutes – burning the equivalent of more than one football field every second during that time. It charred more than 70,000 acres in 24 hours, a space equivalent to the size of the nation of Malta.

  • The number of square miles burned annually from 2000-2020 across California, Oregon and Washington has increased sixfold compared with the average between 1950 and 2000.

  • Nearly 20 percent of fires in 2020 were burning in areas that were scarred by fires as recently as 2000, data from the National Interagency Fire Center shows.

  • The largest wildfire in recorded California history in 2018 was officially extinguished six months after it ignited. You read that right, a fire burned for half a year.

WAIT, AREN’T WE LOOKING AT POST-FIRE?

Yes. With the above established, let’s transport ourselves to the scene of a recent California wildfire —

Now comes the question of this issue: how does a community reforest?

The reforestation challenge matters because the U.S. and the world can’t keep up with the rate we lose forests. Globally 7 million acres of trees are planted each year, but the U.S. lost 8 million acres alone in 2020. In short: the tree deficit rises all the time.

OK, SO WHY DON’T WE JUST GO TO THE TREE STORE AND BUY EVERYTHING?

This isn’t so silly a question. Trees can be grown, right? So let’s grow more trees to manage the need for higher reforestation levels!

Here are two big problems:

  • Reforestation is manual labour. An individual reforesting will carry 21kg (48 lbs) of 1-2 year old trees on his hips in special sacks, walking through forests and with just his or her best guess, plants trees based the best spots of soil. The peak output for a physical planter is 2 acres per day, and they will burn the caloric equivalent of two marathons.

  • The trees can’t be grown fast enough. If you experience a fire on your land, and don’t have the budget or seed, you apply to a government agency for support. Permitting might take a year. Then you receive seeds. Those seeds are then sent to a nursery who grows the seeds anywhere from three months to two years. A refrigerated truck is then hired to take the baby trees out to site, because the last thing you want is them dying in the heat en route. Then you hire a contractor who sources seasonal labour and fulfils the role of the planting man shown above. In that time, what has happened? The fires are burning faster, and in larger parts of the land.

What has Climate and Money or life experience taught us? Manual labour rarely scales. Bottlenecks are productivity killers. Climate change is broadly the story of new markets developing without scale, without correct incentives, and ultimately failing to keep up pace with the rate of change.

ENTER DRONESEED.

One firm — and a founder named Grant Canary — had the vision to consider whether drone technologies could accelerate this process.

Droneseed is paid per acre as a service, to reforest utilising heavy lift drone swarms. They use drone swarms that have a 57-lb payload that utilises seeds in vessels bringing the supply chain bottleneck time from 3 years to 3 months.

Their focus is post-wildfire, because of all the competitive vegetation that’s been removed. Drones need to be charged, and due to battery constraints, do single runs of 8-20 minute flights before returning to the truck to be recharged. Up to five drones can fly in a swarm at once with one pilot, and are completely autonomous.

They charge $300-500 per acre, and hit some of the toughest terrain that only drones can reach. Their clients include nature conservancies, tribal groups, but also timber companies purely interested in forestation acceleration and returns.

CONCLUDING QUESTIONS

Right now Droneseed is a venture capital backed firm, unavailable for direct investment. But that shouldn’t stop us at Climate and Money by asking some basic questions that flex our mental models, and get us all ready for the time when firms like Droneseed will be open to retail investors:

  • Two trucks, two trailers and several drones in one Droneseed team can cover several thousand acres in a year, but based on what we know, isn’t the need for their services going to continue rising? Like a barber shop, and a gardening business maintaining the front lawn of a mansion, isn’t the value proposition perpetual?

  • What are Droneseed’s own bottlenecks?

  • How simple will it be to compete once FAA approval is given to more drone providers? Is there a logistic incumbent who could enter the space at greater scale?

  • Would you invest? If so, why?

  • Lastly: what if carbon offsets pushed the price Droneseed needed to charge down below $300 per acre? Would that make you more or less optimistic in the venture?

And this is where we’ll pick up next issue: untangling the world of carbon offsets, how they relate to nature and forestry, and what opportunities and pitfalls await investors in the coming years.

Optimistically,

Owen C. Woolcock


3 Questions I Am Asking Myself This Week

1. Did you know in California prison inmates are regularly released to help fight wildfires? In Oregon, Gov. Kate Brown is commuting the sentences of 41 inmates who helped battle the historic wildfires that burned in that state in 2020. Welcome to the new normal of climate change.

2. One of the reasons parts of the West might not set new all-time high temperature records this week during its well-reported heatwave is because smoke from wildfires might block just enough of the sun.

3. If you live in a high-risk wildfire zone, at what point does the risk and stress outweigh the benefits? Where do you move and what is the trigger?


If You Read Or Listen To One Thing This Week

A powerful story from VICE (video) on one of the 2300 elite firefighters sent to the country’s most dangerous wildfires, and what the toll of such dangerous work is like on their families.