A New Approach: Payment for Environmental Services

The FRESP team is designing and field testing elements of a Payment for Environmental Services (PES) program – an innovative approach that uses market-like concepts to increasethe provision of environmental services. The PES program is being designed by the FRESP team to achieve two important goals. It will complement public investment in regional water quality and storage projects by adding dispersed water Syfrett management for water retention and phosphorous removal as a tool for water managers. At the same time, it contributes to ranch economic sustainability. PES provides another source of income for ranchers, helping them to increase their profitability, and keeps ranchland from being converted to more intensive uses that could have adverse impacts on water quality and wildlife.

Key elements in the FRESP vision for a PES program:

  • The water management services will be produced on working agricultural lands. The goal is to create a new product – water management services – that ranchers will integrate into their existing agricultural activities.
  • These water management services will be produced by modifying existing water management structures and strategies. Most ranches already have considerable infrastructure to manage water on their ranches. A PES program will provide the incentives to use that infrastructure to retain instead of drain water from their ranches.
  • Ranchers enter into fixed term contracts. Fixed term contracts (between 5-20 years) not easements are the basis of the envisioned PES program. A PES program will complement the existing array of easement programs that ranchers currently have access to.
  • Payment is based on provision of documentation. The contract will specify what documentation is required annually to demonstrate that, subject to rainfall, the landowner met the terms of the contract to provide water management services.
  • Above and beyond regulatory requirements. All landowners by law are expected to meet some threshold of provision of water management services. Only the services that exceed the regulatory baseline will be eligible for payment.
  • Creates a new ranch profit center. The PES program will create a new product – water management services- that generates a new revenue source for the ranch operation.