The Environmental Supply of Farm Households: A Flexible Willingness to Accept Model

The purpose of the paper is toanalyse farmers' participation inenvironmental schemes, which are gaining agrowing importance within the Europeanagricultural policy. These schemes areimplemented through voluntary contracts thatpay farmers for the provision of environmentalservices. The microeconomic model that isdeveloped is a farm household model thatincorporates the producer and consumerbehaviour of the farmer to optimise hisenvironmental supply considering that theenvironmental service that he is supplying alsohas the characteristics of a public good. Defined as the difference between the profitloss in providing the environmental service andthe willingness to pay to consume this service,the household's willingness to accept (WTA)is compared with two flexible WTA measures thataccount for the technological flexibility ofthe environmental supply. Data come from asurvey of an agri-environmental schemeimplemented in the Walloon region of Belgiumsince 1995 and intended to protect the nestingof some endangered bird species. Econometricresults show that contingent valuation is areliable method to reveal the behaviours offarmers facing the invitation to participate inthis scheme. They also confirm that farmerbehaviour is also influenced by environmental preference.