Payments for ecosystem services within the hybrid governance model: evaluating policy alignment and complementarity on California rangelands

Governance of global natural resources is increasingly hybrid, with complementary public and private sector initiatives layered on landscapes to improve environmental outcomes. The challenge of polycentric land use governance is alignment of goals across diverse governance mechanisms when agricultural producers, public agencies, and corporations have distinct motivations. This case study of soil carbon governance on California rangelands explores a new payment for ecosystem services (PES) initiative led by the food and agriculture industry, called the Ecosystem Services Market Consortium (ESMC). Applying hybrid governance theory to agricultural lands, we conduct an ex-ante policy evaluation of potential policy impact based on (i) alignment between corporate sustainability goals and ranchers' priorities and (ii) complementarity of the ESMC market with existing public and private policies enabling rangeland conservation. We found corporations developing the PES market to be motivated by carbon insetting, the objectives of which converge with ranchers' goals of preserving soils. Each policy offers distinct benefits and challenges, with synergies around climate change adaptation and soil health. As a new policy tool, carbon markets like the ESMC are positioned to meet demand for soil health financing, support resilience and ranch productivity, and improve ranchers' access to soil health data for adaptive management. Given carbon markets' outcome-based payment structure, we highlight the importance of complementary governance mechanisms that mitigate upfront risk with financial and technical support during the transition period, including Farm Bill cost-share programs and private sector financing tools. This policy evaluation highlights the challenges and opportunities surrounding rangelands soil carbon governance, particularly the trade-offs that ranchers, corporations, and society at large must consider for landscape-scale conservation programs.