Pay for Performance: A Market-Based Approach to Conservation

Delta Institute collaborated with Winrock International and Sand County Foundation to create an innovative and comprehensive “How To Guide” for a new concept called “Pay for Performance,” a market-based incentive to pay farmers for documented improvements to water- and soil- quality as a result of conservation-focused agricultural practices.


Why Our Work is Needed

Water quality impairments resulting, in part, from agricultural nutrient runoff have remained stubbornly difficult to solve in the United States. In U.S. freshwaters alone, the cost of eutrophication is estimated to total at least $2.2 billion annually. Fortunately, farmers can cost effectively implement land management changes which minimize soil erosion and nutrient losses from their fields. These agricultural changes, which do not disrupt commodity production in our agricultural lands, are often more cost-effective than urban-based approaches to mitigate pollution. Several government programs already exist to support farmers implementing improved practices. Historically these are ‘pay-for-practice’ programs, in which standardized financial payments are provided for a set of standardized management practices, regardless of the local field conditions. When these programs were initiated, the existing data and technology prevented cost-effective estimation of the nutrient reductions resulting from a specific change in practice for a given location.


Brief Overview of What We’re Doing

In this guidance document, we present an alternative “Pay-For-Performance” (PfP) conservation approach that capitalizes on scientific and technological advances to deliver cost-effective and quantifiable estimates of nutrient reductions. Under the PfP program, field and farm specific information is combined with nutrient and economic modeling to find the most technically and cost-effective ways to reduce nonpoint source pollution. Payments to farmers are then based on the quantified estimate of nutrient reductions. The combination of a challenging problem, the freedom to creatively collaborate on a solution to that problem, and a data-driven framework for making decisions and providing incentive payments is powerful motivation for farmer involvement in solving a water quality problem.

We intend for this guidance document to serve as a handbook to agricultural and conservation organizations as well as publicly-owned treatment works (POTWs) and municipalities who are interested in planning and implementing a flexible solution to agricultural nonpoint source pollution. This guide strives to not only describe the steps of implementing a new program, but also to provide examples of challenges and successes from our experience administering these programs in Iowa, Vermont, Ontario, and in the Great Lakes region including Wisconsin, Michigan, and Ohio.

PfP conservation creates an exciting new framework for engaging farmers and other stakeholders, providing customized information about farming operations and solutions for how to best tackle “hot spots” or “problem areas” on specific farm fields. PfP has the potential to empower farmers to play an active, costeffective, and significant role in meeting conservation and water quality goals.See how it works.



Delta is grateful to the Great Lakes Protection Fund for generously supporting this scope, and to Winrock International and Sand County Foundation for our collaboration and partnership.

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