Why Farmers Opt Not to Enroll in Payment-for-Environmental-Services Programs

Payment-for-environmental-services (PES) programs are the focus of increasing attention globally. While existing PES programs can observe who participates and who does not, the reasons for nonparticipation can be opaque. Taking advantage of a unique stated preference data set that includes a follow-up question on conditions for participation, this study differentiates two types of non-participants, those deterred by insufficient payments, and those deterred by fundamental incompatibility with the farm operation. Survey weighted and spatially weighted probit models are applied to examine the determinants of farmers’ willingness to enroll in PES programs and their willingness to consider enrollment at the same or a high payment. Results suggest the decision to enroll relies more on farm benefit-cost factors, such as program payment, total land area and current farming practice, while the decision to consider enrolling depends more on farm and operator characteristics, such as environmental attitudes, soil traits, current government program enrollment or commitment to organic farming. Both decisions also show evidence of spatial dependence that suggest spill-over effects due to natural resources, interpersonal communication, or other socio-economic factors. These findings elucidate reasons for non-participation in PES programs and provide insights for future program design and targeting.