An investigation into the type of farmer who chose to participate in Rural Environment Protection Scheme (REPS) and the role of institutional change in influencing scheme effectiveness

This paper examines the voluntary aspect of the Rural Environment Protection Scheme (REPS) in Ireland by modelling the type of farmer who chose to participate in the agri-environment programme from 1995 to 2010. The impact of changing scheme payment rates and organic nitrogen restrictions on scheme uptake are also examined. In order to examine some of the heterogeneity of variable influence on participation across the different phases of REPS, separate models for each of the four phases were ran (one for a reference year in each phase). Results from the random effects model show that the type of farmer who was most likely to participate in REPS over time had an extensive farm system, low income and spent more hours working on-farm than their non-REPS counterparts. Single year logit model results were compared to the random effects panel logit model for the entire sample period. The results suggest that the individual year models do a better job in demonstrating how farmers responded to contractual changes in the scheme over time (in terms of their participation decision) compared to the panel model.     

Factors Affecting Farmers’ Participation in Agri‐environmental Measures: A Northern Italian Perspective

Agri‐environmental measures play an important role in Italian rural areas, as shown by the financial commitment to the Rural Development programmes. However, in contrast with other European Union (EU) countries, policy‐makers still have limited experience on how farmers approach environmental incentive schemes. This paper casts new light on this issue from a northern Italian perspective. The rationale of the farmers’ decision‐making process is explored using two multinomial models. The first explains the probability of non‐participation or participation in one of three specific agri‐environmental measures. The model outcomes show that labour‐intensive farming types and high dependency of household income on farming activity constrain farmers’ participation, whereas previous experience, easy‐to‐implement environmentally friendly farm practices and adequate compensation of extra costs encourage participation. The second model explores the effect of farmers’ attitudes and beliefs on their predispositions towards participation in any of the schemes. The results highlight that, besides income factors, the farm's future in the business, and the relationship with neighbouring farmers and their opinions on environmentally friendly practices all have significant effects on adoption of agri‐environmental measures. The paper concludes by suggesting that farmers’ attitudes and beliefs, as well as the local behavioural influences, have to be taken into account when designing and communicating agri‐environmental measures.     

Cattle Farmers’ Preferences for Disease‐Free Zones in Kenya: An application of the Choice Experiment Method

Management of livestock diseases is important in ensuring food safety to consumers in both domestic and export markets. Various measures are prescribed under the Sanitary and Phytosanitary Standards (SPS) agreement of the World Trade Organization. In order to prevent the spread of trans‐boundary cattle diseases, the SPS agreement recommends the establishment of Disease‐Free Zones (DFZs). These have been implemented successfully in some major beef‐exporting countries, but in Kenya are still at a pilot stage. To understand Kenyan farmers’ preferences on the type of DFZ that would be readily acceptable to them, a choice experiment was conducted using a D‐optimal design. Results show that farmers would be willing to pay to participate in a DFZ where: adequate training is provided on pasture development, record keeping and disease monitoring; market information is provided and sales contract opportunities are guaranteed; cattle are properly labelled for ease of identification; and some monetary compensation is provided in the event that cattle die due to severe disease outbreaks. Preferences for the DFZ attributes are shown to be heterogeneous across three cattle production systems. We also derive farmers’ preferences for various DFZ policy scenarios. The findings have important implications for policy on the design of DFZ programmes in Kenya and other countries that face similar cattle disease challenges.     

Semi‐parametric Modelling of Investments in Heating Installations: The Case of the Dutch Glasshouse Industry

This paper applies a semi‐parametric approach to estimating a generalised model of investments in heating installations. The results suggest that marginal costs of investments in heating installations increase quickly at small investment levels, whereas the increase slows down at higher investment levels. Therefore, standard parametric adjustment cost models are probably biased such that they underestimate the costs of small investments and overestimate the costs of large investments. Results also show that investments in heating installations are very responsive to changes in energy prices. Therefore, an energy tax may be an effective instrument to encourage investments in new energy‐saving heating installations.     

Measuring rural consumers’ willingness to pay for quality labels using experimental auctions: the case of aflatoxin‐free maize in Kenya

Aflatoxins are a common health hazard in tropical countries, especially in rural areas. New methods to reduce aflatoxin levels in food staples, as well as cheaper test methods, are being developed, but consumers’ willingness to pay (WTP) for these improvements is unknown. A survey was conducted with a representative sample of rural consumers (1,344 in total, 63% women) in all major maize‐production zones of Kenya. The survey included an experimental auction with maize products of different qualities. The results showed that many rural consumers were aware of aflatoxins, but few understood their health risks. Respondents were willing to pay a premium for maize tested for aflatoxins and labeled, but asked a high discount for maize that was visibly contaminated with moldy grain. The premium was higher for respondents with education and in regions with aflatoxicosis outbreaks. Knowledge of aflatoxins substantially reduced the overall WTP, but did not increase the WTP for tested maize. Welfare analysis indicates that mandatory testing would result in substantial benefits if the cost of testing can be lowered to below the premium.     

Bilateral Information Asymmetry in the Design of an Agri‐Environmental Policy: An Application to Peatland Retirement in Norway

Agriculture is a significant source of global greenhouse gas (GHG) emissions. GHG mitigation through agri‐environmental programmes could be important in achieving emission reduction targets under the 2015 UN climate agreement. This study uses the principal‐agent model to examine a peatland retirement programme to reduce agricultural emissions in Norway. The focus is on the role of the government's private information in programme design. Two cases are examined. First, optimal contracts are derived when farmers have private information about the costs of implementing peat land retirement, but the government reveals its information on the resulting public benefits through differentiated contracts. This corresponds to the standard targeting strategy with one‐sided information asymmetry. In the second case, an informed principal model developed by Maskin and Tirole in a 1990 study is employed to address bilateral information asymmetry. Using the informed principal model, the government offers the same menu of contracts to farmers in order not to disclose information on the public benefits from land retirement. Empirical results show that the government can achieve a higher payoff by using a pooling offer.