Modelling the Participation Decision in Agri-Environmental Schemes

Understanding what influences farmers’ decisions to participate in a voluntary agri-environmental scheme(AES) is essential for gauging scheme success. The Rural Environment Protection Scheme (REPS) was a voluntary AES that was available to all Irish farmers from 1994 to 2009. This paper models the participation decision of Irish farmers in REPS using a 15-year panel dataset. The approach taken is novel: actual values for gross outputs, direct costs and working hours are compared to simulated counterfactual values using a conditional logit framework. Model results show that Irish farmers behave rationally by maximising utility from both consumption and leisure but that their preferences differ by region and over time. In addition, the participation functions of viable and non-viable farmers are dissimilar in a number of ways. Policy makers may therefore need to target both groups of farmers using separate schemes in the future.