Headwater catchments in the mixed‐conifer zone of the American and Merced River basins were selectively thinned in 2012 to reduce the risk of high‐intensity wildfire. Distributed observations of forest vegetation thinning, precipitation, snowpack storage, soil water storage, energy balance, and stream discharge from 2010 to 2013 were used to calculate the water balance and constrain a hydroecologic model. Using the spatially calibrated RHESSys model, we assessed thinning effects on the water balance. In the central‐Sierra American River headwaters, there was a mean‐annual runoff increase of 14% in response to the observed thinning patterns, which included heterogeneous reductions in leaf area index (–8%), canopy cover (–3%), and shrub cover (–4%). In the southern‐Sierra Merced River headwaters, thinning had little impact on forest structure or runoff, as vegetation growth in areas not thinned offset reductions from thinning. Observed thinning effects on runoff could not be confirmed in either basin by measurements alone, in part because of the high variability in precipitation during the measurement period. Modeling results show that when thinning is intensive enough to change forest structure, low‐magnitude vegetation reductions have greater potential to modify the catchment‐scale water balance in the higher‐precipitation central Sierra Nevada versus in the more water‐limited southern Sierra Nevada. Hydrologic modeling, constrained by detailed, multiyear field measurements, provides a useful tool for analyzing catchment response to forest thinning.

We applied an eco‐hydrologic model (Regional Hydro‐Ecologic Simulation System [RHESSys]), constrained with spatially distributed field measurements, to assess the impacts of forest‐fuel treatments and wildfire on hydrologic fluxes in two Sierra Nevada firesheds. Strategically placed fuels treatments were implemented during 2011–2012 in the upper American River in the central Sierra Nevada (43 km2) and in the upper Fresno River in the southern Sierra Nevada (24 km2). This study used the measured vegetation changes from mechanical treatments and modelled vegetation change from wildfire to determine impacts on the water balance. The well‐constrained headwater model was transferred to larger catchments based on geologic and hydrologic similarities. Fuels treatments covered 18% of the American and 29% of the Lewis catchment. Averaged over the entire catchment, treatments in the wetter central Sierra Nevada resulted in a relatively light vegetation decrease (8%), leading to a 12% runoff increase, averaged over wet and dry years. Wildfire with and without forest treatments reduced vegetation by 38% and 50% and increased runoff by 55% and 67%, respectively. Treatments in the drier southern Sierra Nevada also reduced the spatially averaged vegetation by 8%, but the runoff response was limited to an increase of less than 3% compared with no treatment. Wildfire following treatments reduced vegetation by 40%, increasing runoff by 13%. Changes to catchment‐scale water‐balance simulations were more sensitive to canopy cover than to leaf area index, indicating that the pattern as well as amount of vegetation treatment is important to hydrologic response.

A frequent barrier to addressing some of our world’s most pressing environmental challenges is a lack of funding. Currently, environmental project funding largely comes from philanthropic and public sources, but this does not meet current needs. Increased coordination and collaboration between multiple levels and sectors of government, in addition to private sector funding, can help address the environmental funding challenge. New financial tools and strategies can enable this transition and facilitate uptake of innovative solutions. One such mechanism, the Environmental Impact Bond (EIB), is an emerging financial tool with the potential to transform the environmental funding landscape. However, these financial instruments are not well understood or recognized beyond those actively involved in EIB projects or in the field of conservation finance. As EIBs gain momentum, there is a clear need for a common framework, including definitions and nomenclature, research needs, and outlook for the future. In this paper, we define EIB mechanics, elucidate the difference between EIBs and Green Bonds, and propose a common vocabulary for the field. Drawing on first-hand experience with the few EIBs which have been deployed, we review and assess lessons learned, trends, and paths for the future. Finally, we propose a set of future targets and discuss research goals for the field to unify around. Through this work, we identify a concrete set of research gaps and objectives, providing evidence for EIBs as one important tool in the environmental finance toolbox.

California has recently experienced one of the worst droughts on record, negatively impacting forest ecosystems across the state. As a major source of the region's water supply, it is important to evaluate the vegetation and water balance response of these montane forested watersheds to climate variability across the range of rain-to snow-dominated precipitation regimes. The Standardized Precipitation Index (SPI) and the Standardized Runoff Index (SRI) were used to capture the hydrologic drought signal, and MODIS vegetation indices (i.e., the normalized difference vegetation index and the enhanced vegetation index) were used to evaluate the vegetation and evapotranspiration response in three headwater catchments. The study catchments comprised a low elevation rain-dominated site (Caspar Creek) on the northern California coast, a mid-elevation site with a mix of rain and snow (Providence Creek) in the California Sierra Nevada, and a high elevation snow-dominated site (Bull Creek) in the Sierra Nevada. Lowest SPI values occurred in the third drought year of 2014 for all sites. Lowest SRI was in 2014 for Caspar, but in 2015 for Providence and Bull, reflecting differences in snowpack-delayed runoff and subsurface storage capacity between the lower and higher elevation watersheds. The most accurate water balance closure using evapotranspiration estimates from vegetation indices was within 10% of measured precipitation at snow-dominated Bull. The rain-dominated Caspar watershed had the highest vegetation index values and annual evapotranspiration, with the lowest variability over the previous 13 years (2004-2016). Vegetation index values and annual evapotranspiration decreased with increasing elevation and snow contribution to precipitation. Both snow-influenced Sierra Nevada watersheds showed elevated vegetation and evapotranspiration responses to interannual climate variability. There remains a need for institutional support to expand long-term observations in remote forested mountain watersheds to monitor and research these changing and extreme environmental conditions in source watershed regions.