How to increase the effectiveness of agri-environmental subsidy schemes through knowledge of farmer perceptions-a choice experiment on pesticide free buffer zones

Danish farmers have been far less interested in agri-environmental subsidy schemes than anticipated. We use choice experiments to estimate 486 Danish farmers’ preferences for a number of policy relevant scheme-characteristics. Subsidy schemes for pesticide free buffer zones along hedgerows are used as a case and analysed using a random parameter logit framework. By quantifying farmers’ preferences in monetary values, we are able to assess the relative importance of individual scheme-characteristics. Farmer’s assessments of the administrative burden are captured by estimating how they value free-of-charge assistance for the application procedure. To our knowledge, this measure of administrative burden has not been tested before. Our results indicate that payment size was perceived to be the most important scheme characteristic narrowly followed by flexible contract terms (an option to cancel the contract and contract length) and still of significant importance but less so are practical management restrictions (choice of buffer zone width, using fertilizer, and reduced administrative burden).