Environmental incentives, or Pay-for-Performance, is an economic incentive program that links payment to measurable outcomes. Environmental incentives focus on project effectiveness not the lowest-cost.
About
Environmental Incentives, also known as Pay-for-Performance, are a financial incentive for private companies, private property owners or government agencies to implement projects that reduce runoff. Links payment to delivery of verified pollutant or stormwater load reductions.
A basic pay for performance model includes:
- Pay for Performance Contract – defines terms
- Service Provider – designs and completes project
- Environmental Outcomes – quantified and verified
- Local Government – pays based on pollutant load reduction or volume of water retention
Types of Pay for Performance:
- Partial – initial payment to implementer to cover some or all costs and secondary payment once load reductions are verified
- Full Delivery – ties payment to measurable outcomes
- Entrepreneurial Banking – private sector organizations fund stormwater projects and co-permittees purchase load reductions after they have been certified as credits. All financial agreements are private transactions.
For-profit companies mentioned or listed are not endorsed or recommended by the WSU EFC, but are simply used here as examples and for educational purposes.
Project Examples
Lake Tahoe, CA
Lake Clarity Crediting Program
Since 2011, the Lake Clarity Crediting Program has been measuring and setting load reduction targets for key pollutants that every city, county and highway maintenance agency must achieve. The targets, “credits,” can be traded to meet requirements.
Mokelumne River, CA
Mokelumne Watershed Environmental Benefits Program
The Mokelumne Watershed Environmental Benefits Program provides private and public land managers incentives to implement practices that ensure long-term watershed sustainability. By creating a framework where environmental benefits are tracked and traded, the program encourages cost-effective investments in forest, meadow and streamside restoration.
