Payments for environmental services with ecological thresholds: farmers’ preferences for a sponsorship bonus

Abstract

Designing incentives for agri-environmental public good provision with threshold effects calls for payment mechanisms favouring critical mass participation and continuity of commitments at the landscape scale. We conducted a choice experiment to test the acceptability of a bonus in a scheme for improving river water quality in France. We introduce a sponsorship bonus each time the farmer convinces a peer into entering the scheme, which can be combined with a collective result bonus per hectare if the river reaches a higher step on the water quality scale. We consider the involvement of local financers could increase the willingness to pay beyond opportunity costs and income foregone and propose higher levels of payment than agri-environmental schemes. Results suggest a sponsorship bonus on its own is cost-effective. We characterize respondents’ heterogeneity and identify three groups based on choice patterns: (i) “pro-environment individualists”, (ii) “management change averse” farmers, and (iii) “pro-incentive” farmers.