Communities need clean and abundant water to thrive, our livelihoods and well being depend on it. We all have a personal stake in helping landowners and conservation professionals properly care for the forests and land our water comes from. What if communities could maximize the impact of their investments in forest health treatments while rewarding landowners for implementing management practices that improve the environment and deliver verifiable results? We pay for outcomes instead of actions.
Performance Based Conservation is an innovative way of rewarding public and private land stewards for the delivery of measurable environmental outcomes. The consultants at Environmental Incentives define Pay for Performance contracts, also known as Pay for Success or Environmental Impact Bonds, as contractual agreements focused on impact. Under such agreements, beneficiaries pay for the environmental benefit produced, such as reduced sedimentation entering downstream infrastructure, as opposed to paying for the action of implementing the forest health treatment.
The type of payment mechanism chosen partially depends on the amount of risk the funder is willing to take. In traditional agreements, all risk is assumed by the funder. In Pay for Success, the amount of risk sharing is determined by how much is paid upfront versus the portion paid after conservation outcomes are verified. Environmental Incentives has recently launched a Pay for Performance Toolkit which provides an abundance of information on different pay for performance strategies, along with customizable contract templates and real-world examples of how pay for performance is being used to address numerous environmental issues.
Why Use Performance Based Conservation?
Financial incentives are powerful motivators. There are many benefits to having landowners and conservation professionals determine the most cost-effective ways to achieve and maintain desired environmental outcomes. In their technical brief, Pay for Performance Strategies for Western States, Environmental Incentives shares the following benefits of Pay for Performance mechanisms:
- Reduces risk of funding ineffective projects
- Achieves long-term stewardship
- Enables rapid, large scale conservation with buyer efficiency
- Supports adaptive management and learning
- Demonstrates environmental return on investment
- Leverages private capital to support conservation
- Inspires public trust to sustain long-term conservation programs and mitigation policies
How Does Peaks to People Use Performance Based Conservation?
Peaks to People Water Fund has created a voluntary, incentive-based watershed investment fund that enables transparent and efficient payments to stewards who:
- Use best management practices in priority places as defined by our Watershed Investment Tool
- Protect water supply infrastructure in the upper Poudre River & Big Thompson watersheds
Stewards may include individual landowners, public agencies, or watershed coalitions that work with multiple landowners to implement projects.
In order to fairly balance the level of risk of achieving outcomes between the beneficiary and the treatment implementer, Peaks to People uses a “partial pay for success model” where the beneficiary makes an initial payment to cover the upfront costs of implementing the treatment, but only makes the second payment to the implementer once outcomes are measured and demonstrate that the treatment has been effective.
Inspiring Innovation to Ensure Success
When we work together to solve environmental challenges, we can empower private investors, landowners, conservation professionals and service providers to play an active, cost effective, and significant role in meeting conservation and water quality goals. By using Performance Based Conservation strategies, we can improve the environment and deliver results that count.