Encampment is the first Wyoming community to tap the state's clean water funding to proactively protect its forests from wildfires and safeguard the town's water supply.
Every time someone in Wyoming turns on the tap, there’s a good chance their drinking water begins in a forest. From the snow-covered summits of the Wind River Range and jagged peaks of the Teton Range to the lodgepole pine forests of the Medicine Bow National Forest, Wyoming’s forested watersheds capture snowpack, filter runoff and supply clean drinking water to communities across the state. These mountains also form the headwaters of several of the largest river systems in the western United States, making the state's forests vital to water supplies for millions of people downstream.
Forests are among the nation's most important clean water sources. More than 80% of the freshwater supply in the United States originates in forested watersheds. The Medicine Bow-Routt National Forest alone supplies water to approximately a quarter of Wyoming’s population. Yet these natural water systems are increasingly threatened by drought, insect infestations and more frequent and severe wildfires. Protecting these systems requires proactive forest management — such as thinning overgrown forests and restoring watershed health — but these investments are often beyond the financial reach of many rural communities.
In the small town of Encampment, in southeastern Wyoming, local leaders are working with municipal, state and nonprofit organizations to protect their drinking water from the threat of a devastating wildfire. Encampment is becoming the first community in the state to use financing from state-administered clean water infrastructure programs to invest in proactive forest restoration to avoid far higher costs and damages if disaster strikes in the future.
A Small Town With Big Stakes
Nestled along the western edge of the Medicine Bow-Routt National Forest, Encampment is home to roughly 500 residents. Surrounded by forests, ranchlands and recreation trails, the town depends on a single intake source for its drinking water, which makes it especially vulnerable to wildfire. A fire in Encampment’s watershed could leave the community without reliable or safe drinking water for up to five years.
This is a challenge faced by many communities across the North American West. More than 2.4 million acres of public land have already burned this year.
When severe fires burn through a watershed, the impacts continue long after the flames are extinguished. Ash, sediment and debris can wash into streams, drinking water intakes and reservoirs for years, degrading water quality, clogging water infrastructure and overwhelming the ability of treatment systems to provide reliable drinking water. For communities with limited infrastructure and only one source of drinking water, wildfires can trigger a prolonged public health and economic crisis.
This is not a hypothetical threat. Just east of Encampment's watershed, the 2020 Mullen Fire burned nearly 177,000 acres across the Medicine Bow-Routt National Forest. As the largest wildfire in Wyoming's recorded history, it came within feet of two of the City of Cheyenne’s drinking water reservoirs. As wildfire risk continues to rise across the West, many communities recognize that the question is no longer whether a major wildfire will occur — but when.
Protecting Water Starts in the Forest
The good news is that communities are not powerless against wildfire risk.
Research shows that every dollar invested in proactive forest management can generate a sixfold return in avoided damages by reducing losses to homes, lives, communities and ecosystems.
In Encampment's watershed, town leaders are working with the U.S. Forest Service and Wyoming State Forestry to reduce wildfire risk and improve long-term forest resilience by using restoration and fire mitigation techniques such as forest thinning and prescribed fires.
In some areas, restoration crews will thin overly dense forests by removing dead, beetle-killed trees as well as selected live trees where forests have become overcrowded. Woody debris will then be chipped into small pieces, reducing the amount of fuel available to feed future wildfires. In other areas, prescribed fires will complement these efforts by safely removing excess vegetation under carefully controlled conditions. These treatments help slow the spread and intensity of wildfires, protect soils and protect the town's drinking water source.
Encampment Mayor Shannon Fagan understands the stakes: “We've seen the real impacts of wildfire nearby and we know how important it is to protect our watershed,” she said. “That is why the Town of Encampment is in full support of this critical project. We have concerns about wildfire and its impact on our surface water source, the quality of life for our residents and our local businesses and recreation opportunities.”
Forest thinning and prescribed fire are only part of the solution. Eventually, the project will also include additional nature-based watershed restoration designed to improve ecological function and strengthen long-term resilience of the watershed. By restoring streams, wetlands and other natural features before a fire occurs, communities can reduce the likelihood of post-fire runoff and debris flows. Healthy wetlands and riparian areas promote the settling of sediment and ash, preventing it from contaminating drinking water supplies and increasing treatment costs.
Financing Prevention Instead of Paying for Disaster
Although the benefits of forest restoration are widely recognized, many small communities lack the budget or authority on federal or state lands to carry out these activities on a meaningful scale. In the Medicine Bow-Routt National Forest, it costs an estimated $2,000 per acre to complete forest thinning.
While the U.S. Forest Service manages national forests where many communities’ water originates, limited federal funding means restoration projects often cannot keep pace with growing wildfire threats. When severe wildfires occur, downstream communities frequently bear the costs through higher drinking water treatment expenses, damaged infrastructure and economic disruption. As a result, communities increasingly have a strong incentive to work with state and federal agencies to identify priority projects and invest proactively in forest management that protects their water supplies.
Conservation finance can address funding gaps where federal resources fall short; however, attracting private capital to small, rural areas can be challenging. Unlike larger cities where potential beneficiaries have facilities, headquarters or other assets at risk from environmental threats, smaller towns and communities don’t usually have the same kind of incentives to attract investment in preventive environmental management. They also frequently have limited staff capacity and financial resources to explore and pursue these opportunities.
Encampment, however, has deployed an innovative solution. They are the first community in Wyoming to use the state's Clean Water State Revolving Fund (CWSRF) to finance proactive forest restoration for wildfire mitigation.
To make the project possible, Encampment partnered with the Wyoming Office of State Lands and Investments, the World Resources Institute, National Forest Foundation, City of Cheyenne and the Wyoming Association of Rural Water Systems, to secure a $1.2 million loan. Because Encampment qualifies as a “disadvantaged” community under the program's affordability criteria, the town received 75% principal forgiveness. The project also qualified for a 0% interest rate because it was funded through the CWSRF's Green Project Reserve, which supports projects that use natural infrastructure and other environmentally beneficial approaches to improve water quality and resilience. The remaining loan amount will be repaid through contributions secured from project partners.
The funds will be used across approximately 600 acres of high-priority forest within the town's watershed to simultaneously reduce wildfire risk while creating work for local contractors and supporting Wyoming's forest products industry.
Using Water Infrastructure Financing for Watershed Protection
The CWSRF is a joint federal-state program traditionally used to finance wastewater, stormwater and water infrastructure projects. However, part of its funding is allocated for green solutions, such as forests, wetlands and floodplains that provide water filtration, storage and support other ecosystem services.
Encampment is just one example of towns and communities that are exploring how these funds can also support natural infrastructure projects that protect water quality at its source. Flagstaff, Arizona, pioneered the use of CWSRF funds for wildfire mitigation in 2019 through a $6 million loan for forest thinning and wildfire mitigation. The Nisqually Indian Tribe in the state of Washington received a $14.2 million CWSRF loan in 2020 to acquire and permanently protect more than 900 acres of headwater forest, protecting water quality while improving salmon habitat and watershed resilience. Flagstaff, Arizona, pioneered the use of CWSRF funds for wildfire mitigation in 2019 through a $6 million loan for forest thinning and wildfire mitigation.
Encampment's project represents one of Wyoming's most significant investments in green infrastructure and the first project funding wildfire mitigation through the CWSRF program.
“In Wyoming, the CWSRF program is always willing to support any green project for which a municipality applies for funding; however, municipalities and consulting engineers normally focus on failing wastewater collection infrastructure or water meters,” said Shawn King, state revolving fund program manager for the Wyoming Office of State Lands and Investment. “I think this Encampment project is probably the truest green project we have ever funded in my 10 years with the program.”
Obtaining the funding wasn’t easy, though. It took more than three years for the partners to study the program, secure loan repayment and work with the Wyoming Office of State Lands and Investments, which had never funded a wildfire risk reduction project with this program before.
The loan is also just one piece of a broader funding and financing strategy needed to achieve meaningful landscape-scale restoration and reduce wildfire risk across an entire watershed. By providing a reliable source of matching funds, the loan has helped the partnership compete for additional funding. Most recently, the project was identified for potential support through the state’s new Forest Health Grant Program to treat an additional 150 acres.
“The Encampment Watershed project is a great example of what can happen when a community, state and federal agencies, and conservation partners bring their resources together around a shared need,” said Matt Marshall, assistant state forester at Wyoming State Forestry. “Wyoming State Forestry will serve as the implementation partner, using Good Neighbor Authority to put these combined investments to work on the ground. We are pleased to see Wyoming’s new Forest Health Grant Program being leveraged in such a high-priority area and paired with partner funding.”
A Model for Other Communities Across the West
Demand for water infrastructure funding continues to grow across the country. In Wyoming alone, applicants requested more than $109 million through the state's fiscal year 2027 Clean Water State Revolving Fund priority list, while only a fraction of that amount is expected to be available as principal forgiveness.
As competition for funding increases, many communities understandably focus on urgent infrastructure needs such as pipes, treatment plants and wastewater systems. Yet climate-driven risks are making it increasingly important to protect water at its source, and protecting forests can be one of the most cost-effective ways to do so.
The Encampment project demonstrates that financing watershed restoration is possible when communities, land managers, utilities and nonprofit partners work together. State officials have noted that the Encampment watershed project could serve as a model for future investments in watershed restoration and water pollution prevention. Broader adoption will require continued innovation, partnerships and community leadership. For communities across the West that depend on forested watersheds, the lesson is simple: Investing in prevention today can help ensure clean, reliable drinking water tomorrow.
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Facts Only
* Encampment is the first Wyoming community to use state clean water funding to invest in proactive forest restoration for wildfire mitigation and water supply protection.
* Wyoming's forested watersheds capture snowpack, filter runoff, and supply drinking water from mountain ranges like the Wind River Range and Teton Range.
* More than 80% of U.S. freshwater supply originates in forested watersheds.
* The Medicine Bow-Routt National Forest supplies water to approximately a quarter of Wyoming's population.
* Wildfires cause ash, sediment, and debris to wash into streams and water intakes, degrading water quality for years.
* The 2020 Mullen Fire burned nearly 177,000 acres across the Medicine Bow-Routt National Forest.
* A fire in Encampment’s watershed could leave the community without reliable drinking water for up to five years.
* Forest thinning and prescribed fires are proposed restoration techniques to reduce fuel load and slow wildfire spread.
* The project secured a $1.2 million loan using the CWSRF program, with 75% principal forgiveness due to eligibility as a disadvantaged community.
* The funds will be used across approximately 600 acres of high-priority forest within the town's watershed.
Executive Summary
Encampment, a Wyoming community in southeastern Wyoming, is leveraging state clean water funding to finance proactive forest restoration efforts aimed at wildfire mitigation and protecting its drinking water supply. The area relies on forests for capturing snowpack, filtering runoff, and supplying water from the Wind River Range and Teton Range watersheds. These natural systems are threatened by drought, insect infestations, and wildfires, which can lead to prolonged contamination of water sources through ash and debris.
The community is pioneering the use of the Clean Water State Revolving Fund (CWSRF) for this purpose, investing in forest thinning and restoration techniques. This project involves partnering with state and federal agencies, including the U.S. Forest Service and Wyoming State Forestry, to implement mitigation strategies like thinning and prescribed fires to reduce wildfire risk to the watershed. A key component of the plan includes nature-based restoration of streams and wetlands to manage post-fire runoff and prevent water contamination.
Financing this work involved securing a $1.2 million loan from partners, which included 75% principal forgiveness because Encampment qualified as a disadvantaged community under CWSRF criteria. This project showcases how watershed protection can be funded through water infrastructure programs, moving beyond traditional focus on wastewater to encompass natural infrastructure.
Full Take
The narrative presents a powerful argument for shifting resource allocation from reactive disaster response to proactive environmental management, specifically demonstrating how ecosystem health directly translates into public water security. The central tension lies between the immediate, tangible needs of rural communities facing imminent wildfire threats and the established institutional focus of water infrastructure funding, which traditionally targets physical pipes and treatment facilities.
The mechanism employed—using the CWSRF for green infrastructure like forest restoration—is an innovative maneuver that seeks to bridge this gap. It redefines "infrastructure" by incorporating natural systems (forests) as essential components of water security, a concept demonstrated by precedents in Flagstaff and the Nisqually Tribe. This forces a re-evaluation of who bears the cost of environmental degradation: large downstream entities suffering costs from post-fire runoff versus smaller upstream communities facing direct physical threats.
The success hinges on collective action across jurisdictional lines (municipal, state, federal) and partner organizations. The pattern suggests that when funding mechanisms are flexible enough to support watershed resilience—rather than being rigidly siloed into traditional engineering projects—the potential for systemic risk reduction becomes high. The investment in ecosystem services proves cost-effective by avoiding future disaster costs, but the continued challenge lies in establishing a durable precedent for this type of collaborative, preventative financing that outpaces the linear, short-term political cycles governing federal and state funding streams.
BRIDGE QUESTIONS:
If watershed restoration is demonstrably more cost-effective than post-disaster remediation, what systemic changes are necessary within state and federal financial frameworks to prioritize these ecosystem services alongside traditional water infrastructure? How can mechanisms be established to ensure that the incentives for private capital flow toward preventative environmental management in small, rural areas rather than larger, more obvious assets? What specific policy adjustments could formalize the collaborative governance model seen in Encampment as a standard practice across Western watersheds?
Sentinel — Human
The article presents a well-structured argument linking regional water security to forest health, using a specific community investment as a concrete example of innovative, multi-stakeholder financing for watershed protection.