Farmers’ preferences toward an outcome‐based payment for ecosystem service scheme in Japan

Abstract

Abstract We estimate farmers’ preferences for outcome‐based (or results‐based) payment for ecosystem service scheme in Japan. To this end, we use a two‐stage stated preference approach—the first stage models farmers’ decisions to adopt outcome‐based contracts using a discrete choice experiment. The second stage estimates the areas of land which farmers who choose to participate will enrol in the scheme. Based on a sample of 333 respondents, our results show that most farmers are willing to participate in outcome‐based contacts. A variety of contract attributes are found to influence farmers’ decisions on participation. However, once a farmer decides to participate, their decision on how much farmland to enrol in is likely to be influenced solely by the per‐hectare payment. Therefore, to encourage more farmers to participate and enrol more farmland, policy‐makers’ decisions on the level of payments offered are critically important.