winsten the next generation of conservation
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Pay-for-Performance Conservation:Concept and Program Design Issues
Jonathan Winsten, Ph.D.Agricultural EconomistWinrock International
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Conservation Programs Should:
• Provide clear nutrient reduction goals• Focus on environmental outcomes• Provide flexibility and incentive to
maximize “bang for the buck”• Motivate farmers to reduce nutrient loss
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Background• Food production and environmental quality
have inherent trade-offs.• Regulations decrease productivity and increase
costs.• Current conservation programs focus on
practices, not outcomes.– Any BMP has highly variable outcomes.
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P Loss Reduction - Cost per Pound
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Background• Food production and environmental quality
have inherent trade-offs.• Regulations decrease productivity and increase
costs.• Current conservation programs focus on
practices, not outcomes.– Any BMP has highly variable outcomes.
• Pay-for-performance conservation can motivate farmers, lead to innovation, and reduce costs.
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• Rewards farmers for achieving specific environmental performance targets;
• Farmers choose how to achieve targets; • Incentivizes farmers to choose the most cost-
effective actions; • Provides opportunities for additional farm
income.
Pay-for-Performance Conservation
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The Economic Justification
• Market failure• Current programs focus on specific practices
– Subset of possible actions– Designed to offset cost– Effectiveness varies greatly
• Performance-based incentives can serve as a “price” for pollution control
• Environmental performance becomes incorporated into farm business planning
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The Economic Justification
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Key Questions: Where and How?
Where do we quantify environmental performance?• Need performance measures that are closely related
to ultimate water quality concern AND directly influenced by farm management decisions.
How do we quantify environmental performance?• Measurement vs. Modeling
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Performance Measures –In the Lake, Bay, or Ocean
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Performance Measures –In the River
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Performance Measures –On the Farm
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Key Questions: Where and How?
Where do we quantify environmental performance?• Need performance measures that are closely related
to ultimate water quality concern AND directly influenced by farm management decisions.
How do we quantify environmental performance?• Measurement vs. Modeling
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Edge of Field Monitoring
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In-stream Monitoring
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Modeled Performance
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Measured vs. Modeled Performance
• Measured performanceReal data from actual conditionsVolatile weather makes planning difficultIs measurement practical at the farm-level?Use of proxy variables
• Modeled performanceAllows for scenario analysis – before actions are taken.Is it accurate enough?
• In a given year? • Over the long-term?
Is it simple enough to use?• Trade-offs between simplicity and accuracy?
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For More on Quantifying Performance
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Model at the Farm –Measure at the Watershed
• Modeling farm performance– Triggers primary incentive payment
• Measuring watershed performance– Provides a focal point and real report card – Triggers a secondary incentive payment– Farmer-to-farmer peer pressure for participation
• Concept recent winner in U.S. “Nutrient Challenge”
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Program Design Questions
What do we pay for?• Reduced losses vs stewardship levels
How much do we pay?• Setting the appropriate incentive level
Where will the funding come from? • More efficient use of current spending• Regulated entities downstream
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Lessons Learned
• Cost-effectiveness varies greatly across AND within BMPs;
• Producers are motivated by becoming agents of change;
• Performance-based incentive payments can induce cost-effective outcomes;
• Quantifying performance is information and labor-intensive.
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Looking Ahead• Information systems are improving
rapidly– Models– Remote sensing– Measurement methods
• Tight budgets and persistent WQ problems
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Contact Information
Jonathan R. WinstenAgricultural EconomistWinrock InternationalEmail: jwinsten@winrock.org Tel: +1-802-343-3037
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