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Paying for Environmental Outcomes: A How-to Guide

How can communities get the most from their investments in the environment?

In places like Nevada, ranching has been a way of life for generations, while industries like mining provide key drivers of economic growth and community stability. But these lands also hold historic and cultural value to another mainstay of the West – the greater sage-grouse. Finding the balance between community resiliency, economic stability, and preserving and enhancing the natural environment is no easy task.

This story plays out in communities across the country as they strive to address the growing need for infrastructure, economic growth, clean water, and healthy environments for both people and nature. The State of Nevada is working to protect and enhance greater sage-grouse habitat by finding cost-effective solutions that protect their growing economy and maximize the environmental benefit achieved through the use of public funds. Their answer to this complex challenge? Pay for performance contracts.

Pay for performance contracts, sometimes referred to as pay for success or environmental impact bonds, are contractual arrangements focused on impact. Where traditional grants reimburse for actions, pay for performance contracts connect payment to measurable environmental outcomes, such as acres of habitat preserved or gallons of stormwater averted. It also gets private investors, landowners, and service providers to think creatively about solving environmental challenges.

The State of Nevada is using pay for performance contracts to reward landowners for improved sage-grouse habitat achieved as a result of actions such as removing invasive plants and using prescribed grazing plans. This approach is allowing the state to maximize the impact of their public funds ($2 million has gone towards on-the-ground projects to date), and reward landowners for implementing cost-effective solutions to deliver results.

This approach isn’t new. In fact, it has widespread use in the social sector, addressing challenges ranging from homelessness to recidivism to education. But it is still nascent in the conservation sector, with vast untapped potential to increase the impact from investments in the environment. To transition from paying for actions to paying for outcomes, entities that fund conservation projects (such as cities, states, and nonprofits) need the right resources and tools at their disposal to appropriately engage the private sector in creating environmental improvement.

Pay for Performance Toolkit

Environmental Incentives, in partnership with Partners for Western Conservation and other public and private partners, is working under a USDA Conservation Innovation Grant to help conservation programs achieve better environmental outcomes using pay for performance contracts. A “how-to” for the environmental sector, the newly launched Pay for Performance Toolkit provides information on when to use and how to select different pay for performance strategies, along with customizable contract templates and real-world examples of how pay for performance is addressing a spectrum of environmental issues.

With the many challenges affecting the health of our ecosystems, wildlife, and communities, working together is not just the best solution, it is the only solution. Pay for performance has the potential to inspire a new, more effective model of conservation – one that brings conservation buyers to the table with local communities and diverse stakeholder groups to scale solutions that work.

Visit the Pay for Performance Toolkit for step-by-step guidance and downloadable resources to implement pay for performance.

About the Toolkit

The Pay for Performance Toolkit was developed through a USDA Conservation Innovation Grant led by Environmental Incentives and Partners for Western Conservation. Project partners include Environmental Defense Fund, Nevada Department of Conservation and Natural Resources, Nevada Division of Environmental Protection, Idaho Office of Species Conservation, and Utah Department of Natural Resources.


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