Investigation of Farmers’ Preferences to Participate in Payment for Ecosystem Services (PES) Program of Ghazvin Plain Watershed

Document Type : Research Paper


1 Department of Agricultural Economics, Faculty of Agriculture, Tarbiat Modares University, Tehran, Iran

2 Department of Environmental Planning and Design, Environmental Science Research Institute (ESRI) Shahid Beheshti University, Tehran, Iran


From the beginning of 2000’s, payments for environmental services (PES) have emerged as innovative instruments for environment conservation policy. Indeed, they allow translating non market values of ecosystems into financial incentives for local stakeholders who produce these services, thus increasing the acceptability of conservation policies. PES are voluntary agreements, under which direct beneficiaries of environmental services are willing to pay (incentive) the service suppliers, under the conditionality of effective service delivery. PES have been especially implemented for watershed protection to reduce erosion, regulate water flows, enhance groundwater recharge, mitigate floods and improve water quality.
The study of the world's environmental situation reflects that there is abundant evidence that many ecosystems have suffered from over-exploitation and mismanagement, to the point where their long-term viability, and thus their ability to provide services, is at risk. This is commonly explained by a lack of institutions, including markets, which could otherwise guide the supply and demand for ES. Externalities, a lack of well-defined property rights and limited information hamper efforts to optimize ES provision between those who benefit from an ES and those who affect its provision. Payments for ecosystem services (PES) programs are one potential solution to this problem. PES programs use conditional payments to encourage individuals and communities to undertake environmentally beneficial land management actions. They help internalize the benefits associated with enhancing or maintaining ES to ensure that land managers face incentives concordant with the interests of ES users. To improve the likelihood of achieving intended environmental benefits, PES programs should be designed to suit local circumstances, both in regard to the environmental problem at hand and the social context. An important part of adapting PES to a particular circumstance is taking into account the preferences of those targeted for participation. Therefore, it seems to be possible to implement it in many plains and ecosystems of the country and minimize the problems of resource mismanagement.
The increasing interest arisen by this type of instrument can be explained by the possibility to negotiate the contractual terms and the choice of conservation measures, the voluntary and free character of the subscription and the opportunity to adapt contractual terms and conservation measures to the local context (type of ecosystems and services providers). Moreover, in developing countries, PES may contribute to poverty reduction through the provision of additional income to vulnerable rural people.

The choice experiment approach chosen for this research, is based on stated preferences, and aims at understanding the determinants of individual choices. Individuals are placed in a hypothetical choice situation, as close as possible to reality where they are asked to compare several alternatives. Each alternative is described with attributes, with varying level or intensity, which are assumed to influence individual choices and, consequently, the utility associated with the attributes by individuals. Alternatives are selected and paired according to an experimental design and utility variations are assessed using an empirical model specified according to the random utility theory.
We use a choice experiment to quantify farmer preferences for PES program design. Choice experiments are often used to value environmental goods or services, but can also be used to value environmental programs represented as combinations of attributes. For instance, a PES program will combine a particular payment amount, a particular payment method and a particular set of land use requirements in order to create a functional program. Choice experiments can be used to quantify preferences for individual program attributes, as well as to quantify overall ‘willingness to accept’ (WTA) values: the amount of payment required to induce participation in the program. Valuably, choice experiments can test multiple, hypothetical versions of a program simultaneously. In a choice experiment, participants are asked to choose between competing hypothetical goods/outcomes as described in a questionnaire. The hypothetical good/outcome is a package of attributes, each of which can take on a number of levels which are varied between scenarios. It is assumed that farmers face a loss of utility due to the changes in management practice required by a PES contract, and a gain of utility from the associated payment. A farmer is assumed to choose a contract if the net utility from that choice is greater than either no contract or any competing choices. Based on random utility theory, the probability of a farmer making a particular choice is assumed to increase as the utility of that choice increases. The willingness to accept (WTA) for a marginal change of a given attribute is measured by the ratio of two parameters statistically significant. WTA confidence interval is estimated using the « Delta » method proposed by Hole, 2007. When the parameter of the attribute or of the payment is not significant, WTA measure has no sense. The estimated model is a conditional logit which represents the observed indirect utility function.

The first step in CE consists in choosing the attributes to describe the hypothetical PES, and in defining the number and value of attributes’ levels. In our case study, the chosen attributes are related to, on one hand, different methods of serving ecosystems, and on the other hand, incentive measures aiming at encouraging farmers to join the PES program. Attributes were chosen as bellow:
a) Changing the pattern of cultivation of cultivation: which have two levels as yes or no
b) Improve irrigation methods: which have two levels as yes or no
c) Cash payments to single farmers: which have five levels as 0, 5000000, 10000000, 15000000, 20000000 IRR
d) Non-payment (agricultural land utilization by new methods of irrigation): which have two levels as yes or no
e) Conditionality: which have three levels as low, moderate and high
To conceive the choice sets it to be submitted to interviewees, all the possible combinations of the levels of all attributes have been generated. The choice Sets selected for the experiment include two alternatives in addition to the status quo (opportunity to opt out). The selection of choice sets among all possible combinations was based on a reduced and D-Optimal approach of 16 alternatives, which have been distributed into two blocks, respecting orthogonality within and between blocks. Each respondent was faced with eight different choice sets.
In this study, survey was administrated to 144 household heads randomly selected among the 3 stratified of Qazvin plain. Farmers were questioned in face-to-face interviews. Surveys were undertaken in private and took an average of 42 min each. Enumerators were experienced research assistants, who were also local community members familiar with the culture and farming practices found in the study area. Interviews were requested with the ‘head of household’. In addition to the eight choice sets, interviewees were also asked about their perception of the present state of the environment in the studied area, as well as their activities and their socio-economic and demographic characteristics.
The results of this study indicate that farmers are willing to participation for ecosystem services (PES) program. In this study we assess farmers' preferences to three different levels of conditionality, two methods of payment and two methods of service delivery. Two methods of payment are as fixed annual cash payments to single farmers and non-payment (agricultural land utilization by new methods of irrigation) that are significant. So, these methods are affected on motivating farmers to participate. Two methods of service delivery are as changing the pattern of cultivation and Improve irrigation methods that are significant but farmers prefer to change the pattern of cultivation. In addition, by increasing the constitutional level, the probability of participation decreases.


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