When some people think about farm runoff, they see pollution, a problem that needs to be fixed by government-funded conservation projects.

Ashley Allen sees an investment opportunity.

Allen, the founder and CEO of i2 Capital, is working with The Nature Conservancy to get conservation practices on farms in the Brandywine-Christina watershed in Pennsylvania and Delaware.

The two groups are taking advantage of a relatively new investment strategy called pay for success.

In this model, private investors pay for the project up front, and another entity, usually the government, pays the investors if the project hits certain performance metrics.

The strategy is being used to combat a number of social and environmental challenges, but in this case, the challenge is agricultural runoff.

Brandywine Creek flows through the rich farmland of Chester County, Pennsylvania, before meeting Delaware’s Christina River in Wilmington.

Agricultural conservation practices can trap some of this runoff at the farm, reducing the sediment and fecal bacteria that municipal water companies downstream have to deal with, said Richard Jones, the Delaware state director for The Nature Conservancy.

Those water companies are the ones Allen and Jones are hoping will pay the investors if the plan succeeds in reducing farm runoff.

In June, USDA gave i2 and The Nature Conservancy an $805,000 Conservation Innovation Grant, which Allen said will be used to establish the terms of the project.

“There are a whole series of contracts and agreements” that are needed to bring all of the stakeholders together, Allen said.

Negotiations are expected to take 12 to 18 months, with the on-farm work done in the several years following.

One of the big challenges in this type of investment is defining success &tstr; i2 and The Nature Conservancy are working with a firm that specializes in developing such standards.

Regulators will also have to be on board with the plan because they approve rate increases for water utilities.

Increases would likely be necessary to pay for the conservation practices, but the environmental improvements would justify them, Jones said.

“This is about financial innovation to support conservation. This is about getting more money into conservation at the source,” Allen said.

In the same round of USDA grant funding, the Chesapeake Bay Foundation received $415,000 for an agricultural conservation pay-for-success program in York and Lancaster counties in Pennsylvania.

“Farms get practices that reduce the amount of polluted runoff entering our rivers and streams, municipalities get credit toward their (storm sewer) requirements and save money doing it, and investors make a profit,” said Harry Campbell, the foundation’s executive director for Pennsylvania.

Pay for success is a relatively new investment concept.

The first project debuted in the United Kingdom in 2010, according to a report commissioned by the U.S. Corporation for National and Community Service.

Pay for success is considered a type of impact investing, fueled by people who want to get a financial return while providing a social benefit.

Those benefits aren’t always related to conservation.

In Baltimore, Johns Hopkins Health Care agreed to pay the Calvert Foundation a portion of avoided medical costs if investor-funded mold cleanup efforts in low-income housing reduced asthma-related hospital visits, according to the community service corporation.

Pay for success moved into conservation when the D.C. Water and Sewer Authority agreed to reward investors Goldman Sachs and the Calvert Foundation if stormwater projects the two financed met runoff reduction goals.

Like any investment, pay-for-success initiatives sometimes miss their mark. When that happens, it’s the investors, not the government, who bear the brunt of the loss.

New York City shut down a pay-for-success program at its Rikers Island prison in 2015 after the intervention failed to reduce recidivism.

The loss was borne by the investor, Goldman Sachs, and by Bloomberg Philanthropies, which guaranteed most of the investment bank’s loan, according to The New York Times.

The Brandywine-Christina and Chesapeake Bay projects could be safer investments than Rikers was, considering there is a lot of data on agricultural conservation practices and investors aren’t betting on people changing their behavior.

As the pay-for-success strategy develops, it will likely work best for projects with results that are readily quantifiable, V. Kasturi Rangan and Lisa A. Chase wrote in the Stanford Social Innovation Review in 2015.

The Environmental Protection Agency already maintains quantitative goals for the Chesapeake Bay cleanup, so again, ag conservation might be a good fit.

The Nature Conservancy and i2 still have a lot of work to do to get their pay-for-success project off the ground, but if they make it, they could open a new avenue for farmers to improve water quality.