the fire-water nexus: why utilities should invest together in the water cycle

Your electric utility just spent $50 million on fuel reduction along transmission corridors. Your water utility just spent $30 million upgrading treatment capacity. Neither talked to the other. Both are paying to solve the same problem — and neither is actually solving it.

The forests that carry fire to power lines are the same forests that filter water for treatment plants. The watersheds that burn become the sediment loads that overwhelm intake facilities. The landscapes that lose vegetation stop cycling moisture into local precipitation.

Fire risk, water supply, and regional climate are the same problem. Utilities that invest separately are paying twice for half the solution.

the compound risk nobody's pricing

Here's what happens when a headwater forest burns:

The 2002 Hayman Fire in Colorado sent sediment loads into Denver Water's reservoirs that required over $30 million in emergency response and ongoing treatment modifications. The utility had already been investing in watershed protection — but not at the scale the fire demanded.

This isn't a one-time cost. Post-fire watersheds take decades to recover. Every utility drawing from that watershed pays elevated costs for years.

The electric utility's fire became the water utility's sediment became the stormwater utility's flood became the region's drought. One landscape failure cascades through every utility's balance sheet.

the water cycle connection most utilities miss

As we explained in want snow? invest in the water cycle, healthy forests don't just filter water — they create precipitation.

The small water cycle — local evapotranspiration creating local clouds and rain — provides more precipitation to continental interiors than ocean moisture does. Forests drive atmospheric dynamics through the biotic pump. Healthy soils and vegetation seed clouds through bioprecipitation.

When fire destroys forest cover:

1. Evapotranspiration drops — less moisture enters the atmosphere
2. Local precipitation declines — the small water cycle breaks
3. Snowpack arrives later and melts faster — timing shifts hurt water supply
4. Remaining vegetation faces drought stress — fire risk increases further

This is a vicious cycle. Fire degrades the water cycle, which degrades vegetation, which increases fire risk, which degrades the water cycle further.

Fuel reduction isn't just fire prevention — it's water cycle restoration.

why utilities invest separately (and shouldn't)

Utilities operate in silos for understandable reasons:

But watersheds don't respect utility boundaries. The headwater forest that protects an electric transmission corridor is the same forest that filters water for a downstream utility. The meadow that slows spring runoff for hydro generation is the same meadow that reduces flood peaks for stormwater systems.

The landscape is one system. The utilities are many.

As we covered in why utilities are investing in watersheds instead of treatment plants, natural infrastructure delivers better outcomes at lower lifecycle cost — but only if utilities can coordinate investment.

the regional coordination problem

Imagine three utilities with overlapping interests in the same 50,000-acre watershed:

Total: $27M/year, mostly uncoordinated.

Now imagine they pooled resources:

Same $27M. Three times the outcome. Every utility's risk goes down.

The problem isn't resources — it's coordination.

what you'll lose by not acting

Utilities that continue investing separately face compounding costs:

Electric utilities:

• Fire destroys the watershed you didn't protect together
• Post-fire conditions increase future ignition risk
• PSPS scope expands as treated corridors become islands in burned landscape
• Regulatory pressure intensifies after each catastrophic season

Water utilities:

• Treatment costs spike after fires you had no role in preventing
• Reservoir capacity lost to sedimentation you couldn't stop
• Supply reliability degrades as the water cycle breaks down
• Rate cases become harder to justify as costs escalate

All utilities:

• Regional precipitation patterns shift as forests disappear
• Snowpack timing becomes less predictable
• Drought and flood extremes intensify
• The landscape you all depend on degrades faster than any single utility can restore it

The utilities that invest together in landscape restoration will have lower costs, better regulatory relationships, and more resilient systems. Those that don't will pay for each other's failures.

how ensurance enables regional coordination

As detailed in the cost of PSPS vs the cost of fuel reduction, utilities can justify landscape investment on pure liability math. But single-utility investment leaves value on the table.

Ensurance syndicates allow multiple utilities to pool capital around shared natural infrastructure:

the mechanism

1. Multiple utilities identify shared watershed — The landscape serves fire reduction, water supply, flood control, and water cycle function simultaneously

2. Syndicate issues ensurance certificates — Specific ensurance certificates represent claims on the watershed's ecosystem services

3. Utilities and investors purchase certificates — Each utility's contribution reflects their stake in the outcomes

4. Proceeds fund ongoing stewardship — Treatment, restoration, and monitoring are funded continuously

5. All participants share benefits — Fire risk reduction, water quality improvement, flood mitigation, and water cycle restoration accrue to everyone

why this works

what coordinated investment looks like

phase 1: shared assessment

Before investing, utilities need shared understanding of the landscape:

• Fire behavior modeling — Where does ignition risk threaten infrastructure?
• Hydrological modeling — How does land cover affect water supply and timing?
• Sediment/debris risk — Which areas pose post-fire water quality threats?
• Water cycle function — Where does evapotranspiration drive local precipitation?

This assessment identifies priority treatment zones that serve multiple utilities' interests.

phase 2: coordinated treatment

Landscape-scale treatment addresses multiple objectives:

phase 3: perpetual stewardship

One-time treatment isn't enough. Vegetation grows back. Fuel loads accumulate. The water cycle needs ongoing support.

Ensurance provides continuous funding through:

• Trading activity on ensurance coins
• Premium payments on certificates
• Proceeds distribution to stewardship agents

This isn't grant-dependent or budget-cycle-vulnerable. It's market infrastructure.

the regulatory case

Regulators are increasingly receptive to coordinated natural infrastructure investment:

For electric utilities:

• CPUC considers wildfire risk reduction in rate cases
• Coordinated investment demonstrates system-wide thinking
• Documented outcomes support cost recovery

For water utilities:

• EPA green infrastructure guidance supports natural solutions
• Source protection is increasingly valued over treatment expansion
• Climate resilience requirements favor watershed investment

For all utilities:

• Multi-utility coordination signals mature risk management
• Shared investment spreads costs across ratepayer bases
• Quantified ecosystem service value supports regulatory approval

what we do

BASIN facilitates regional utility coordination through:

Assessment and prioritization

• Multi-utility watershed assessment
• Shared fire-water-flood risk modeling
• Priority treatment zone identification
• Water cycle function analysis

Syndicate formation

• Governance structure design
• Certificate structuring
• Investor coordination
• Regulatory support for each utility's rate case

Treatment coordination

• Cross-boundary treatment planning
• Contractor specification and oversight
• Landowner and agency coordination

MRV and documentation

• Continuous monitoring
• Outcome verification for each utility's metrics
• Regulatory-grade reporting

See our services catalog for details.

the window is closing

Every fire season that passes without coordinated investment:

• Burns more watershed that all utilities depend on
• Degrades the water cycle that feeds regional precipitation
• Increases costs for every utility drawing from affected landscapes
• Makes future coordination harder as systems degrade

The utilities that figure out regional coordination now will have:

• Lower treatment and operating costs
• Reduced liability exposure
• Better regulatory relationships
• Actual risk reduction, not just risk shifting

The utilities that wait will keep paying separately for problems that grow faster than any single utility can solve.

next steps

1. Map your shared watersheds — Which landscapes serve multiple utilities' interests?
2. Identify potential partners — Which utilities share your risk exposure?
3. Model coordinated scenarios — What would pooled investment deliver vs separate spending?
4. Talk to BASIN — Contact us about syndicate formation and assessment

related reading

• the cost of PSPS vs the cost of fuel reduction — Why electric utilities should invest in landscape treatment
• want snow? invest in the water cycle — How healthy landscapes create precipitation
• why utilities are investing in watersheds instead of treatment plants — Natural infrastructure economics for water utilities