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Getting What We Pay for: Payments for Wildlife and Biodiversity Outcomes Under Farm Bill Programs
Susan Culliney and Sara Vickerman

Introduction
The recently passed 2014 Farm Bill refined the conservation programs that reward farm and forestland owners for conservation practices. Although the funding pie is smaller, the present need for such programs is greater. The nation faces ongoing challenges that threaten to not only degrade wildlife habitat and water resources, but also diminish the amount of land in forests. Climate change will also introduce challenges, placing water resources and wildlife in jeopardy and in some cases reducing the efficacy of certain conservation practices. In these uncertain times, innovation and efficiency are paramount to achieve desired outcomes with taxpayer investments in conservation. One of the innovations that could potentially optimize the federal investments in farm and forestland conservation is beginning to experiment with “outcome- based” incentives over “practice- based” incentives; if successful this approach could be expanded. Performance-based approaches are not new and the idea is simple: pay landowners (also known as “producers”) for the ecological conditions they create, rather than the practices they follow. In the era of fiscal austerity, such a reform would likely have broad political appeal.
USDA NRCS

A Novel Innovation for Public Conservation Programs
Many existing Farm Bill programs that pay for ecological benefits do so by rewarding landowners for implementing or adhering to a specific set of practices known, or assumed, to result in biodiversity or wildlife conservation benefits. In a practices program, a producer needs only to follow the pre-determined set of steps. Landowners are paid for successfully implementing these steps and not based on an assessment of whether the steps produced the outcome for which the practice was designed. For example, the USDA Natural Resource Conservation Service pays landowners to plant trees by streams in order to reduce erosion, stabilize streambanks, filter nutrient runoff, and improve water quality—all being benefits long-proven to result from these kinds of projects. Some projects perform exactly as hoped, but not always to the same degree, even when the prescription is strictly adhered to. Still, simplification by prescription has helped deploy practices across the countryside at large scale.

USDA NRCSSome existing practices work well at achieving environmental outcomes. For example, restoring riparian vegetation is a common practice that results in a variety of benefits to fish and wildlife, water quality, and to people more directly by providing aesthetic and recreational values. Other practices do not work well at achieving environmental outcomes. For example, riparian plantings can go awry when such practices are required in an area where trees do not naturally occur. A program that pays for this practice expends resources without achieving meaningful ecological results, and could inadvertently cause harm.

Rewarding the actual result instead of the intended result can mean greater accountability for dollars invested. Overall, there is a reciprocal relationship between the certain but rigid approach of using practices and the flexible but necessarily indefinite and risky approach of using outcomes and performance measurement to target conservation programs and to guide the design and implementation of individual conservation projects. Under the 2014 Farm Bill, the US Department of Agriculture may have the administrative flexibility to incorporate biodiversity and wildlife outcomes into its existing practices-based programs, even if only on a limited or experimental basis to begin with. Paying landowners for outcomes, in addition to paying for practices, could result in a greater return for our public investment in Farm Bill conservation programs in the form of greater achievement of biodiversity and wildlife goals.

The idea of reframing public investment in conservation towards outcomes requires clear and practical outcomes and measurements. In such an approach, a payable outcome could be a single indication of habitat quality,1 such as the presence of beaver dams; multiple species and habitat characteristics that represent biodiversity collectively;2 or, the outcome measurement could be presented as a tiered system3 or index,4 such as ecological integrity assessments, into which land parcels are placed according to various criteria. There is a tradeoff when selecting payable outcomes, between constructing the perfect detailed system (which is costly and narrowly focused, but perhaps easier to recognize) and general outcomes (which are less costly and have a wider focus, but may prove unwieldy for monitoring and payment purposes).

The payment structure should incentivize overall production of tangible outcomes and delivery of ecological benefits. A program aiming to pay for ecological benefits should reward actions that enhance benefits (also known as net gain or ecological lift), as well as actions that maintain lands with existing value (no net loss), and lands that have been restored to provide improved habitat. By strategically coordinating with other sources of conservation support in a given area, Farm Bill programs will enhance their potential for achieving specific outcomes and reaching broader conservation goals. An overall goal in transitioning toward an outcome-based orientation is to reframe public conservation investment to be more strategic rather than opportunistic.

Evaluating the Tradeoffs: Performance-based vs. Practice-based
There are tradeoffs to favoring either practices or outcomes.5 Outcomes are theoretically more accurate than practices in achieving an environmental goal because the payment is tied as closely as possible to the achievement of the goal itself. Also, the producers themselves will calibrate a project to better suit local conditions, applying their own knowledge to tailor practices to the site, using information only they have. In a similar fashion producers might locate projects in places that have inherently greater ecological value, as these will yield a higher payment. The tradeoff of course is that often high site productivity is as valuable to crops as wildlife, but the farmer or forester would have to make this decision. Conversely, practice-based approaches in many cases allow the landowner to use poorer quality land.

For conservation organizations, orienting conservation programs towards outcomes may present opportunities to work more closely with landowners to experiment with the methods to best achieve the stipulated outcome. Overall, an outcomes-based approach places greater responsibility with the producer, as opposed to treating the producer as an implementation instrument, while conveying more flexibility and autonomy to farmers and forestland owners.

Andrea Westmoreland CC BY-SA 2.0As is often the case, greater responsibility or autonomy means greater risk. A producer will sacrifice the certainty of practice payments, but have more flexibility to consider their options and diversify their land’s “products” into environmental goods as well as traditional crops. A major challenge to the outcomes-driven approach is that outcomes link an individual landowner’s management actions to ecological benefits that may only be realized or be detectible over longer time frames or broader scales. Outcomes may also be overly broad and difficult to explain or costly to measure; payments for practices are generally simpler and easier to conceive.

This article does not call for the complete abandonment of practices-based programs. Instead, it is important to recognize that outcomes and practices nurture a close, and at times nearly inextricable, relationship. Measuring the outcome in some capacity, whether overt or unacknowledged, is a critical part of developing a standardized practice. Where a practice successfully achieves a conservation objective, the success arises because the practice leads to the outcome it originally was designed to achieve, even when the desired outcome may have not been clearly stated in a USDA practice description. Where a practice does not achieve the desired conservation goal, the connection to the outcome has failed, and the practice requires further refinement. For example, in the Chesapeake Bay watershed, improvement of riparian forest buffer practices took place when better science on the outcomes of practices adjusted standards for buffer width. Where a practice consistently achieves a result, such practices may come very close to being perceived as an outcome itself. For example, the practice of flooding agricultural fields may turn into an outcome, the presence of flooded fields, that itself represents the biodiversity and hydrological integrity of a functioning wetland ecosystem. A narrower but more specific outcome could be presence of waterfowl or shorebirds at the flooded field.

The close relationship between practices and outcomes suggests that well-structured conservation programs can benefit from integrating each approach to a certain degree. Practices that refine their methods within the context of a conceptual outcome are more likely to deliver ecological benefits than practices operating without such guidance. A program that pays for straightforward practices, but uses a conceptual outcome to guide those practices, with an added bonus payment for measurable outcomes attained through implementation could be a practicable solution that results in greater assurance in achieving ecological results. Paying a bonus for tangible outcomes allows creativity and experimentation to flourish, and provides greater incentive to holistically incorporate ecological benefits into farm or land production, rather than relegating conservation values to the fringes of the economic venture. Phasing in an outcomes approach to an existing practices program can result in innovation without abandoning the administrative and financial security of practice payments.

Introducing this New Approach to Conservation Investment
Ideally a carefully selected tangible outcome guiding the implementation of a conservation practice plays a major role in supporting the ecological integrity of its ecosystem. Selection of outcomes to adapt conservation programs can readily borrow from conservation planning which directly links overall ecosystem integrity to local conservation objectives. Refined outcome-based conservation programs could be tiered towards achieving the fish and wildlife conservation goals explicitly articulated in regional or national level conservation frameworks, such as State Wildlife Action Plans, State Forest Resource Assessments and Strategies, and other eco-regional plans. To the extent that these documents represent some level of agreement concerning conservation goals, they add value to Farm Bill programs by providing important ecological and social context. Significant resources were directed towards these conservation plans over the last decade and it makes good sense to consider how the conceptual outcomes articulated in such planning documents can be used to steer, and where necessary refine landowner assistance programs. Ideally, both broad goals and specific local outcomes would be re-evaluated periodically to track effectiveness.

The current USDA payment programs authorized in the 2014 Farm Bill should be evaluated to determine whether there is flexibility in their implementation to have a greater focus on outcomes. Applications to the Regional Conservation Partnership Program can be prioritized if they include an outcomes-based approach,6 or if they demonstrate the participation of multiple landowners in the region.7 The Conservation Stewardship Program, the Environmental Quality Incentives Program, and the Healthy Forests Reserve Program are covered programs under the Regional Conservation Partnership Program,8 thereby nesting smaller scale projects within a larger scale approach that could have a greater ecological benefit across the landscape. The three covered programs focus on practices,9 but the Conservation Stewardship Program and the Environmental Quality Incentives Program offer additional funding for experimental pilot projects via the Conservation Innovations Grants and other programs,10 which could conceivably experiment with using outcomes-based payment approaches. Though rulemaking will be needed to clarify some of the relationships between the programs and how bonus payments for outcomes might work, the prospect of using outcomes is clearly expressed in the Regional Program, with favorable language in the covered programs.

By paying bonuses for outcomes or for regional conservation, the 2014 Farm Bill is poised to introduce outcomes as a feasible method for rewarding conservation activities, and could ultimately bring enhanced guidance and effectiveness to ecological benefit payment programs. Refining the focus of Farm Bill programs toward environmental outcomes offers a way to connect payments to tangible results on the ground. Early iterations of outcomes-based payments will in all likelihood be imperfect, however, and phasing in outcomes to payments under the Farm Bill should therefore be a gradual and collaborative process.

Susan Culliney is an Ecosystem Service Specialist at The Willamette Partnership in Portland, OR. She was awarded a JD with a certificate in environmental law by Lewis & Clark Law School in May 2014. Sara Vickerman is Senior Director, Biodiversity Partnerships at Defenders of Wildlife in Portland, OR.

Acknowledgements:
This article is modified from a white paper written for Defenders of Wildlife. The Packard Foundation and Walton Family Foundation generously provided funding for the project. The following individuals gave valuable feedback used to improve this paper and offered helpful examples of outcomes in the field: Sam Baraso, Drew Bennett, Bobby Cochran, Sally Duncan, Shauna Ginger, Nancy Gloman, Damon Hess, Kassandra Kelly, Brian Kittler, Esther Lev, Laurie Macdonald, Nicole Maness, Noah Matson, Sara O’Brien, Emily Pindilli, Will Price, Carrie Sanneman, and Bruce Taylor.

Notes:
1 See e.g., Astrid Zabel and Karin Holm- Muller, Conservation Performance Payments for Carnivore Conservation in Sweden, 22 Conservation Biology 247 (2008).

2 See e.g., Burghard Wittig, Anne Richter gen. Kemmermann, and Dietmar Zacharias, An indicator species approach for result-oriented subsidies of ecological services in grasslands - A study in Northwestern Germany, 133 Biological Conservation 186-197 (2006).

3 See e.g., Sebastian Klimek, Anne Richter gen. Kemmermann, Horst-Henning Steinmann, Jan Freese, and Johannes Isselstein, Rewarding farmers for delivering vascular plant diversity in managed grasslands: A transdisciplinary case-study approach, 141 Biological Conservation 2888-2897 (2008).

4 See e.g., Astrid Zabel & Brian Roe, Optimal design of pro-conservation incentives, 69 Ecological Economics 126-134, at 131, table 2 (2009); Butler, S.J., L. Boccaccio, R.D. Gregory, P. Vorisek, and K. Norris, Quantifying the impact of land-use change to European farmland bird populations, 137 Agriculture, Ecosystems and Environment 348-357 (2010).

5 See also generally, Rob J.F. Burton and G. Schwarz, Result-oriented agri-environmental schemes in Europe and their potential for promoting behavioral change, 30 Land Use Policy 628-641 (2013).

6 See Agricultural Act of 2014, 113 Pub L. 79 (hereinafter “2014 Farm Bill”), Sec. 1271B(d)(4)(E).

7 2014 Farm Bill, Sec. 1271B(d)(4)(B).

8 See 2014 Farm Bill, Sec. 1271A(1)(B)-(D) (defining “covered program” as including Stewardship Program, Incentives Program, and Forests Program); Sec. 1271B(d)(3)(C) (requiring an application to the Regional Program to include an indication of which covered programs will be used).

9 7 C.F.R. § 1470.24(a);16 U.S.C. § 3839aa(3)(B), 2014 Farm Bill, Sec. 2201(1)(C); 16 U.S.C. § 3839aa-2(f); 2014 Farm Bill, Sec. 2203(4); 16 U.S.C. § 3839aa-2(g); 2014 Farm Bill, Sec. 2203(5); 7 C.F.R. § 625.9(b)(4); 16 U.S.C. § 6573(b).

10 7 C.F.R. § 1470.24(c); 16 U.S.C. § 3839aa-8(a)(2)(E)-(F); 2014 Farm Bill, Sec. 2207(1)(C).
 
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