Funding for North Carolina's Stewardship Program: Evaluating Current Costs, Estimating Future Expenditures, and Identifying a Proper Funding Model
Abstract
North Carolina’s Stewardship Program (NCDENR Stewardship) is responsible for maintaining
mitigation sites and conserved lands held by the state of North Carolina. These sites
have associated endowments, which are invested to generate funds for stewardship activities.
Unfortunately, low interest rates and high inflation rates present challenges to the
endowment funding model. Furthermore, in the case of NCDENR Stewardship, a need exists
to identify comprehensive costs associated with stewardship activities along with
cost drivers to better predict true funding needs. As such, my analysis seeks to identify
all current costs, develop a working template to determine future expenditures, and
propose an appropriate funding model that considers economic factors such as inflation
and interest rates and the institutional capabilities of NCDENR Stewardship. In this
study, a thorough literature review was first conducted to determine comprehensive
costs applicable to NCDENR Stewardship. Next, 64 sites managed by NCDENR Stewardship
were evaluated to determine cost drivers of monitoring activities. NCDENR Stewardship’s
use of lump sum payments to outsourced land trusts resulted in land trusts explaining
59% of the deviance in annual cost. Regression analysis indicates that site characteristics
such as perimeter length could be better incorporated into payment amounts to land
trusts. Using my literature review, average site characteristics, and appropriate
assumptions including a risk premium, annual costs per site are estimated to be $1,843
dollars. Two predictive models, one abbreviated and the other comprehensive, were
developed to assist in determining future stewardship costs. Finally, my analysis
concludes that a periodic fees model, rather than an endowment or hybrid model, currently
represents the most viable funding model for NCDENR Stewardship. This is due to the
model’s ability to adjust for changing costs and economic factors such as interest
rates and inflation.
Type
Master's projectPermalink
https://hdl.handle.net/10161/5210Citation
Burr, Matthew (2012). Funding for North Carolina's Stewardship Program: Evaluating Current Costs, Estimating
Future Expenditures, and Identifying a Proper Funding Model. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/5210.Collections
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