Performance-Based Payments for Conservation:

This monograph describes the planning and first 15§months of a water quality field experiment. In this§experiment a group of farmers in a small watershed in§the Appalachian Mountains received payments for the§water flowing from their watershed. These payments§were structured to increase with increasing water§quantity and quality. As a way to reduce non-point§source pollution, this represents a radical§realignment of responsibilities. Rather than adhering§to contract requirements in a government conservation§program, this approach calls on farmers to assess the§pollution problem across the watershed, identify and§implement conservation practices, and allocate water§quality payments among themselves. We describe the§watershed and economic models used to determine water§prices and structure the payments, outline the formal§and informal institutional arrangements that this§research hinges upon, and discuss farmers responses§based on observed behavior and two rounds of surveys.§Researchers and practitioners working with farmers on§water quality conservation, and those developing§programs using payments for environmental services,§should find this applied research very helpful. This monograph describes the planning and first 15§months of a water quality field experiment. In this§experiment a group of farmers in a small watershed in§the Appalachian Mountains received payments for the§water flowing from their watershed. These payments§were structured to increase with increasing water§quantity and quality. As a way to reduce non-point§source pollution, this represents a radical§realignment of responsibilities. Rather than adhering§to contract requirements in a government conservation§program, this approach calls on farmers to assess the§pollution problem across the watershed, identify and§implement conservation practices, and allocate water§quality payments among themselves. We describe the§watershed and economic models used to determine water§prices and structure the payments, outline the formal§and informal institutional arrangements that this§research hinges upon, and discuss farmers responses§based on observed behavior and two rounds of surveys.§Researchers and practitioners working with farmers on§water quality conservation, and those developing§programs using payments for environmental services,§should find this applied research very helpful.