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.

The investment potential for biochar production from low‐value forest biomass in the western USA is over USD 20 billion at current carbon prices. This investment could generate approximately 70 million carbon credits annual – roughly the same number currently generated globally by all forestry and agricultural carbon projects. Biochar production that utilizes woody biomass specifically from wildfire fuel thinning projects as a feedstock can contribute financially to much‐needed fuel thinning projects. Each coupled biochar and carbon credit production system has positive returns in certain scenarios. Light upgrades to existing biopower facilities have the highest returns, with internal rates of return generally between 10–30%. Mobile biochar production often had the lowest returns. However, land managers can subsidize mobile biochar production up to USD 150–300 per tonne of biochar and still save money in comparison with pile‐burning low‐value biomass while also generating approximately one carbon credit for every two bone‐dry tonnes of low‐value biomass turned to biochar. The critical barrier to industry growth is the lack of transparent biomass supply chains that enable long‐term contracting for feedstock, production schedules, and investment. Moving forward, there are three potential pathways for the biochar industry to scale and utilize biomass from forest management and fuel thinning projects. Either (1) the carbon market will need to sustain high carbon prices, (2) a subsidy or other mechanism will need to decrease the cost of feedstock biomass, or (3) production will need to take advantage of economies of scale to bring down biochar prices while increasing production.

Traditional funding strategies of grants, congressional appropriations, and income from timber sales are insufficient to complete the level of forest restoration necessary throughout California. Stimulating investment into markets for low-value biomass—such as tops and branches of trees, small trees, and dead trees—will add value to forest raw materials and provide additional revenue streams to pay for forest restoration. We evaluate the investment potential of products made from low-value biomass using a discounted cash-flow analysis of several possible forest products including fuels and nonfuels under various climate policy and market scenarios. We demonstrate the carbon benefits provided by these products, attributed to their substitution for fossil-fuel feedstocks and long-term carbon storage. Our work finds that there is an opportunity to develop several highly profitable products, most notably fuels, many of which are eligible for energy and climate policy programs such as California's Low Carbon Fuel Standard and the federal Renewable Fuel Standard. Nonfuel products have an average internal rate of return (IRR) of 13 percent, whereas fuels have an average IRR of 19 percent in our baseline scenario. Although products ineligible for government incentives are generally less profitable, income from the voluntary carbon market greatly increases the IRR. Fostering investment into these products can encourage critically needed funding for forest management while developing a high-impact carbon removal solution enabled by state, federal, and voluntary climate initiatives. On this basis, we conclude that climate policy can support forest restoration in California.

We used a hydro-ecologic model (RHESSys) constrained by measurements of stream discharge, and spatially distributed snow and soil moisture, to simulate the impacts of operational forest treatments, historical wildfire and climate warming on productive mixed-conifer forests. We compared the response of two headwater catchments at the rain-snow-transition elevation in the wetter central Sierra and more water-limited southern Sierra. The variability of precipitation exerted a greater influence on annual evapotranspiration and runoff than vegetation changes from operational fuels treatment or historical wildfire. The short-term impacts of vegetation changes associated with wildfire, however, did have a greater effect on evapotranspiration and runoff than temperature increases in a warming climate. The average central-Sierra headwater response of evapotranspiration and runoff to fuels treatments (-12%, +12%, respectively) and wildfire (-43%, +46%) were greater than the projected responses to a 4.5oC temperature increase (+2% and -7%). The response in the southern Sierra was limited by lower annual precipitation and showed no response to fuels treatments; but the catchment showed respective changes of -11% and +17% in evapotranspiration and runoff for wildfire, versus +9% and -3% to a 4.5oC temperature increase. These results suggest that in the central Sierra, reductions in vegetation from either fuels treatments or historical wildfire can, temporarily, offset reductions in streamflow from a warming climate. In the southern Sierra, impacts of fuels treatments were small, and only more-extensive vegetation removal as would occur with wildfire, results in significant changes in hydrologic fluxes. Further research is needed to investigate how initial hydrologic changes and climate effects evolve as vegetation adapts and regrows following disturbance.

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.