There are several different strategies to implement pay for performance that vary by the degree that payments are linked to outcomes. The Pay for Performance Risk-Reward Spectrum demonstrates four of these strategies as they relate to traditional agreements such as grants and cost-plus contracts. As you move along the spectrum (left to right), each strategy lowers buyer risk and increases the potential financial reward for producers that cost-effectively achieve environmental outcomes.
PAY FOR PERFORMANCE TOOLKIT
For detailed information on how the strategies can be applied in different sectors, download our Technical Briefs.
Selecting the Right Strategy
In regions lacking experience with pay for performance, it may be necessary to start with a strategy in which buyers bear more risk, such as Partial Pay for Performance. Once environmental outcomes are well-defined and buyers, producers, and a network of environmental professionals understand how to price risk, Full Delivery Contracts can be used to increase efficiency, to reduce the risk to the buyer, and to secure conservation at scale.
Learn more about each strategy below.