(Bloomberg) -- One day last January, close to two dozen people rose at dawn to hand-sow thousands of pounds of native plant species across a vast swaths of sand, silt and clay that had emerged when the reservoirs behind four hydroelectric dams on the Klamath River in Oregon were drained.
The Klamath once boasted the third-largest salmon population in the West. But the dams—built a century ago to provide power to a growing US Northwest—destroyed 90% of them by turning a cool, free-flowing river into a warm, stagnant reservoir thick with toxic algae. The Klamath Dam Removal project, at a cost of about $450 million, is one of the largest efforts in American history to redress an environmental wrong.
But getting rid of the reservoirs was just the beginning. As soon as the sediment settled, the race was on to plant the right kind of vegetation before the wrong kind took hold. An aggressive trio of invasive weeds—medusahead, cheatgrass, and star thistle—are among the formidable pests that outcompete slower-growing native plants. And the consequences of letting them spread unchecked will be grave not only for animal species, but humans as well. A little-known beneficiary of global warming, they offer little wildlife habitat and are significantly more fire-prone than native species—the very last thing an already-burning American West needs.
Wildfires are laying waste to unprecedented amounts of American acreage. As more barren soil is exposed, there’s more opportunity for invasive plants to take hold. Josh Chenoweth, the leader of the Klamath team, selected native species to best reclaim the once submerged landscape for its original plant and animal denizens, part of a national effort to preserve native vegetation.
But the challenge is formidable. Restoration plans often require the collection of native plant seeds within roughly 100 miles of the site where they are to be planted. As a result, multiple growing seasons are needed to accumulate enough seeds. The endeavor takes significant investment and time—the kind of business ready made for investors with deep pockets. Private equity firms have been moving in, buying up independent seed growers while touting their arrival as a lifeline to an increasingly crucial industry. But the consolidation could instead hinder the success of future restoration efforts while potentially driving some seed growers out of business.
“The right seeds, in the right place, at the right time to restore our public lands and bolster climate resilience.”
The US government is, by far, the biggest purchaser of native seed because of regulations requiring the use of local, climate-adapted seed for federal restoration projects. In February, the Biden Administration announced a $157 million investment to support 206 of these projects in 48 states—part of a broader $2 billion restoration agenda. Of that, more than $8 million will fund the National Seed Strategy, a program to collect native seed and increase regional seed production capacity. And in February, the Bureau of Land Management (BLM) announced an $18 million investment in the infrastructure, tools, research and labor needed for a robust native seed supply chain.
The new initiative, US Department of Interior Secretary Deb Haaland said at the time, “will help ensure we get the right seeds, in the right place, at the right time to restore our public lands and bolster climate resilience.”
But according to Tom Kaye, the founder and chief scientist at the Institute for Applied Ecology in Corvallis, Oregon, current US restoration commitments will meet only a “fraction of the need.” Citing the uptick in wildfires, invasive species and tree die-offs tied to global warming, he warns that much more is needed to protect native ecosystems.
Six years ago, members of the local Yurok Tribe began collecting native seed for the Klamath dam restoration on their own, since there were no local commercial seed vendors able to provide it in volume. The collected seeds were then sent to contract growers around the West to be expanded into the roughly 19 billion pure live seeds needed to sow the Klamath site twice (just in case the first time fails). In addition to being less flammable and suitable for local wildlife in a way the invasive weeds are not, local native plants also can withstand the region’s punishing summer heat and lack of rain.
“It’s very expensive to custom grow native seed,” says Chenoweth, senior riparian ecologist for the tribe. While none were willing to provide a precise figure, a back of the envelope calculation—given that native seed cost roughly $50 per pound and 19 billion seeds weigh in the tens of thousands of pounds—suggests a cost in the millions of dollars. The initiative was funded under the $450 million agreement that formed the Klamath River Renewal Corporation, paid for with PacifiCorp utility surcharges and bond funding from the State of California.
To restore salmon habitat, Chenoweth designed a plan to re-establish wetlands, oak woodlands, conifer forests and grasslands—each of which influence the complex life cycle of salmon. Wetlands store water so streams can maintain water flows; shrubs and sedges along riverbanks provide nutrients and insects to support a diverse food web, as well as shade necessary to keep the water cool enough for spawning. Old, fallen trees can create pools where gravel can settle—ideal for salmon to lay their eggs.
Unlike the uniformity sought when farming monoculture crops for human or livestock consumption, however, native seed cultivation aims to capture all the genetic diversity in each species. “We want plants that are the opposite of what a farmer wants,” says Kaye, whose group holds an annual National Native Seed Conference. “The natural world needs plants that are genetically diverse and don’t mature at the same time.”
But the native seed industry has been struggling to grow a commercial sector where both big and small companies can thrive—especially since, unlike other farmers, they don’t have access to government assistance or crop insurance. A 2023 National Academies of Sciences [NAS] report highlighted that the native seed market cannot currently meet restoration needs, especially as climate change-induced disasters mount. Given that one exceptionally bad wildfire year can wipe out native seed inventories, the risk becomes clear.
This has created an opening for private equity firms, which contend they are uniquely positioned to provide capital investment necessary to overcome the cost and risk involved. Last year, the Connecticut-based Heartwood Partners purchased Native Seed Group, a collection of the 12 top US native seed producers. It’s the biggest player in the field with 1,142 native grass, shrub and wildflower species.
“It’s easy to view private equity and big companies as the problem,” says Chief Executive Officer Rob Wendell. “The majority of private equity invests capital into expansion activities that will generate growth.” The $9.6 billion restoration industry is certainly increasing. In the native seed space, “private equity is making us more capable of being local.”
“Local” being the key—native plants collected near the restoration sites are already adapted to the climate. But custom collection and production increases the cost. Critics of private equity firms contend they will do the opposite, focusing on fewer common “workhorse” varieties that are suboptimal to locally-collected varieties but easier to produce—maximizing profit but leaving ecosystems less resilient.
“Since NativeSeed Group consolidated, prices have gone up,” Chenoweth says. “[And] one of the biggest problems with commercial sources is a lack of diversity.”
Matthew Benson, a manager at BFI Native Seeds—which provided the bulk of the seeds for the Klamath project—said he’s not sure his operation will survive a more concentrated market. His company focuses on roughly 250 locally-adapted “boutique” species varieties, which shift each year depending on restoration funding. “The native seed industry has consolidated to the point that it looks like an oligopoly,” he says.
US federal agencies oversee 650 million acres of public lands—roughly one-third of all US acreage. These lands are the biggest driver of native seed demand. The Bureau of Land Management purchases around $20 million of seed each year. “Anywhere between 85-90% of seed bought is bought for fire rehabilitation and restoration,” says Peggy Olwell, plant conservation and restoration program lead for the bureau.
The NAS report recommended government agencies be better customers to the industry—most notably, by providing long-term restoration goals companies can plan their seed growing around. In the last year, the government has made progress on that front, says Vera Smith, senior federal lands policy analyst at the non-profit Defenders of Wildlife.
Smith says the Department of Interior’s Native Seed and Restoration Center—designed to coordinate native seed demand and supplies across federal agencies—could be a game changer. But more needs to be done to help seed producers meet demand, she says. “This isn’t an industry that is going to pop up that organically. There’s a lot of barrier-to-entry costs,” says Smith.
In Winters, California, rows upon rows of flowering yellow tufted poppies bloom adjacent to patchy pepperweed. The planting by Hedgerow Farms, a NativeSeed brand, is a species they anticipate will be in demand in the near future. It’s the first crop grown from pepperweed seed collected last year in the San Joaquin Valley.
“You never really know how it’s going to behave. It’s kind of a wild animal,” explains Julia Michaels, NativeSeed Group’s vice president for research and outreach. “There’s a lot of speculation that there will be demand for San Joaquin species given groundwater legislation known as SGMA.”
California’s Sustainable Groundwater Management Act requires local agencies develop plans to protect groundwater levels. As a result, up to 900,000 acres of irrigated farmland will come out of production by 2040, according to a Public Policy Institute of California report last year. And much of it will need to be restored.
Other seed growing groups are figuring out how to become efficient on smaller scales. In 2023, Pat Reynolds left Hedgerow to lead a non-profit, Heritage Growers, to produce native plant species as cheaply as possible. In central Oregon, Kaye and his colleagues have created cooperative groups such as the Willamette Valley Native Plant Partnership, to efficiently collect, grow and distribute remnant prairie species across smaller organizations in the region.
“We need a native seed industry that includes big seed companies so that we have enough seeds for the huge restoration needs on our landscapes—and seed producers that deliver small-batch, locally-adapted seed that is genetically diverse,” explains Kaye. “We can’t take short cuts and grow a ton of one genetic type and sell it to everybody.”
In early May, as the Klamath river flowed unimpeded, the banks were carpeted with native California poppies, lupine and grasses. Chenoweth counted as many as eight butterfly species on the hand-sown seed. “It was incredibly successful,” he says. He’s also taken steps to create his own seed supply via a BLM grant, part of their Seeds of Success program. He plans to collect and multiply boutique seed, such as Oregon Sunshine and yarrow, that he wants to use in future restoration around the region. “Whatever poundage I produce and stash is a win,” he says.
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