Factors affecting Participation and Compensation Requirements in Agri-Environmental Schemes: Insights from a Discrete Choice Experiment

Abstract

This paper uses data from a discrete choice experiment to investigate the factors affecting participation in agri-environmental schemes in Eiderstedt and Südtondern, two grassland regions in Schleswig-Holstein. As expected, higher payment rates increase farmers’ willingness to sign a conservation contract whereas stricter management prescriptions reduce participation. Besides contract design variables, a number of farm-specific variables affect farmers’ willingness to participate. Farmers, for instance, with previous experience in agri-environmental contracting are more likely to choose a contract than those without such experience. Our estimates of marginal willingness-to-accept show that farmers regard contractual obligations relating to fertilizer use and mowing dates as particularly demanding, resulting in high compensation requirements of €100 - 200 per hectare. Farms with high land use intensities – e.g. high stocking rates or low shares of permanent pasture – request higher compensation payments than less intensive farms.