A New Approach: Payment for Environmental Services
The FRESP team designed and field tested 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 was designed by the FRESP team to achieve two important goals. First, PES can encourage ranchers to retain water and remove nutrients from public water bodies as a complement to public investment in regional water quality and storage projects. Second, the payments made for water retention and nutrient removal can contribute to ranch financial sustainability. As another source of income for ranchers, PES payments can help keep ranchers ranching so ranchlands will not be converted to more intensive uses that could have adverse impacts on watershed hydrology, water quality and wildlife.
Key elements in the FRESP vision for a PES program:
- The water management services are produced on working agricultural lands. A new product – water management services – will be produced alongside existing agricultural products.
- The water management services are produced by modifying existing water management structures and strategies, and as rainfall patterns permit, rainfall will be retained (water retention service) or water will be diverted from a public watercourse for nutrients to be removed. Most ranches already have considerable infrastructure to manage water on their ranches. A PES program provides the incentives to provide water management services.
- Ranchers enter into fixed term contracts (10 years) with the buyer of the services - the SFWMD.
- Payment by the SFWMD is contingent on documentation that the service has been provided. The contract specifies 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 provision of water management services. Only the services that exceed the threshold are be eligible for payment.
- Creates a new ranch profit center. The PES program creates a new product – water management services- and the sale of the services is a new revenue source for the ranch operation.