Designing incentives that work for climate stewards, appropriately incentivize climate action and respect existing infrastructure and systems requires careful consideration.

The list is not exhaustive but builds on our experience designing incentives for this pilot. Make sure to tailor it to your organization’s needs and existing capabilities, and the context in which you’re working. Feel free to reach out to [email protected] if you want to discuss this or any pilot work in more detail.

Incentive Design considerations

Expect to have answered - or at least considered - the below ahead of beginning project work.

• [ ] Who is your target recipient, and what amount will meaningfully impact their monthly income? An analogous amount of compensation may significantly help the economic conditions of someone in Uganda, while barely making a difference for someone in Brazil.
• [ ] What is your target payment amount? Payments are tied to stewards’ activity logging their activities. ****Each measurement approach will compensate stewards at a different rate. For example, a reforestation may only take measurements for which they are compensated every 6 months, while someone diverting waste to upcycling may take measurements 6x / month. With this in mind, we designed a target monthly compensation per steward, and worked backwards to the amount of compensation per activity.
• [ ] Does this amount need to vary based on different activities measured by the partner? For example, our initial pilot with DeTrash compensated stewards per KG of trash, regardless of the trash type. We made this decision for simplicity of the pilot. Local recycling facilities value a KG of glass differently than a KG of paper, therefore in order to scale beyond a pilot our system should have a similar variation to be relevant and respect the existing infrastructure.
• [ ] How will your target payment be related to the intrinsic economic value? As discussed in the previous questions, your project might want to reflect the positive externalities of individual activity that the economic value does not fully capture. If that is the case, the relation between the target payment and the intrinsic economic value can be loose. Our pilot with DeTrash at Coroadinho pays a higher sum per kg of waste than what recycling facilities are paying, regardless of the type of waste, and is leading to stewards to find out about recycling opportunities that exceed the length and depth of the pilot.

If any of your answers are “no” to the below, consider whether you have enough information to move forward responsibly.

• [ ] Have you used local and/or reliable data sources to set that target? If your project aims to tailor its target to the economic needs of several locations, try to obtain local data sources to inform your decision. Often, indicators produced by international organizations cannot account for country-specific issues that might affect data availability or reliability. Local sources can account for the required specificity and should be used along with global indicators. For example, our pilot targets local forest workers in Kenya, and women living in a favela in northeast Brazil. We could not rely on GDP per capita or household income surveys that relied on urban income, or formal employment, respectively.
• [ ] Have you considered the compensation your local partner is providing, and how this will complement (and not counteract or contradict) such compensation? For example, DeTrash already has a system to pay environmental stewards a share of the waste reports validated by recycling or recyclable-waste recovery spots via their Recy token. We compensate stewards based on how much waste they recycle, therefore use the same mechanism to determine when and for what to compensate them. Though we ultimately decided to design the incentive based on socioeconomic indicators in the stewards’ locale, understanding and referencing our partner’s compensation structure (IE the market value of the Recy token) in our early incentive design ensured that our incentives weren’t wildly misaligned with theirs.
• [ ] Have you determined the intrinsic economic value of an individual stewardship activity? A simple way of determining the economic value of an individual stewardship activity is the market price for the activity. This project aimed to recognize the positive environmental externalities not factored into the market value of certain activities. Therefore, we had certain liberties in setting the economic incentive we would give to stewards. Nevertheless, the pilot is definite in time, and we did not intend to modify the livelihood of participants entirely, nor other agents’ involvement in the pilot efforts.
• [ ] Have you used local and/or reliable data sources to set that economic value? Like the target payment, the assessment of the economic value of individual stewardship activity greatly benefits from using local, reliable data sources. International prices for commodities or recyclable waste do not reflect the prices that local stewards can obtain. Then, you can assess the local prices by interviewing your partner or potential beneficiaries. We talked with our local partner to identify how much local recycling facilities are paying per kg per type of waste.
• [ ] Can you give money directly to local environmental stewards? Access to individual stewards is the cornerstone of this project. Both pilot partners work with local stewards who are familiar with Web3 wallets, some of whom are using such wallets already with the partners in their tracking / dMRV activities. In our initial pilot with DeTrash, we secured direct access to stewards by working with Neduc, Núcleo de Educação Comunitária do Coroadinho. Through Neduc onboarding efforts, stewards receive their funds directly in their wallets with no intermediary organization.
• [ ] [If measuring economic or livelihood uplift as an impact metric] Can you accurately baseline the household or per capita income of the target recipient or community? It can be difficult to assess the target recipient or community's baseline household or per capita income. Informal economy urban communities can have a stream of sporadic sources of income that is unregistered. Likewise, rural communities can have annual income which is difficult to assess on a monthly basis. Additionally, there can be a plethora of social policies in place that support the household income. An accurate baseline of the household or per capita income of the target recipient will enable you to measure the impact of your project.