Farmers' Willingness to Participate in Payment-for-Environmental-Services Programmes

Understanding farmers willingness to participate in agricultural payment-for-environmental-services (PES) programmes is an essential precondition for designing effective and efficient programmes. Willingness to participate is typically examined via stated preference surveys using the standard hurdle model for whether and how much to participate. Among respondents who decline to participate, such analyses cannot distinguish between respondents who declined due to the payment level and those who were not interested at all. This paper applies a double hurdle model to incorporate a prior condition for whether a respondent is even willing to consider participating in the PES market. The model uses a unique stated preference survey permitting separation of the consideration and enrolment decisions of 1,700 farmers in Michigan, USA. The first hurdle probit model suggests that farmers willingness to consider PES chiefly depends on farm and farmer characteristics, while the second hurdle tobit model shows that decisions on whether and how much to enrol depend more on the payment offer and marginal benefitcost criteria. This study provides fresh insights on facilitating farmer participation in PES programmes using tiered strategies that differ in costs of programme payment and administration.