Drivers and Preferences of European Farmers for Agri-Environmental Public Goods Schemes: A Two-Stage Analysis

The new Common Agriculture Policy (CAP) intends to give more freedom to countries to manage their budget while increasing funding for income support and provisioning of climate public goods from agriculture and farming. For the past 20 years this has been operationalised through incentivising farmers’ contract participation in agri-environmental schemes (AES). In this paper we examine through a two-stage approach, farmer preferences for contract characteristics in a multi-European country Discrete Choice Experiment (DCE) and the determinants of land enrolment in contracts. Overall, we find that longer contracts and high administrative burden decrease the probability of enrolling in a contract over the base levels while shorter contract length and provisioning of advisory support are desirable. Amongst all available contract options, converting arable to grassland options was by far the one that participants asked the most compensation for, across countries. We also find that past experience with agri-environmental schemes and socio-demographics have a strong and statistically significant effect on the percentage of land enrolled, while contract characteristics do not influence enrolment. Finally, we present some evidence of position-ordering effects affecting preferences for contracts and their characteristics but not influencing contract enrolment. Understanding the true cost incurred by farmers to implement AES is crucial for policymakers as failure to do so can make farmers ask for much higher compensation, per hectare, potentially to cover costs of transitioning to different types of farming or to incorporate financial risk by significantly altering their farm practices.