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Testing participation constraints in contract design for sustainable soil conservation in Ethiopia

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  • Tesfaye, Abonesh
  • Brouwer, Roy

Abstract

This paper focuses on contract design to improve the incentive structure of current coordination mechanisms related to sustainable land use management in the Ethiopian highlands. The main objective is to assess whether, and if so under which terms and conditions, rural households are willing to enter into contractual agreements to invest in soil conservation measures on their land. Participation constraints are tested under different soil erosion and institutional-economic conditions in a choice experiment targeting 750 rural households. We show that contracts provided by local government peasant associations offering additional credit, land use security and extension services could be an effective means to increase the share of farmers implementing soil conservation measures. However, trust in contract terms and conditions appears to play an important role. Farmers living in the most erosion prone areas are most likely to participate, while farmers taking soil conservation measures already are less likely to enter into a contractual agreement with the local government. Farmers not taking soil conservation measures will only do so if the contract price is lower than or equal to the income losses suffered from soil erosion.

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  • Tesfaye, Abonesh & Brouwer, Roy, 2012. "Testing participation constraints in contract design for sustainable soil conservation in Ethiopia," Ecological Economics, Elsevier, vol. 73(C), pages 168-178.
    • Handle: RePEc:eee:ecolec:v:73:y:2012:i:c:p:168-178
    DOI: 10.1016/j.ecolecon.2011.10.017
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    5. Fortmann, Lea & Cordero-Salas, Paula & Sohngen, Brent & Brian, Roe, 2016. "Incentive Contracts for Environmental Services and their Potential in REDD," International Review of Environmental and Resource Economics, now publishers, vol. 9(3-4), pages 363-409, September.
    6. Abebe, Gumataw K. & Bijman, Jos & Kemp, Ron & Omta, Onno & Tsegaye, Admasu, 2013. "Contract farming configuration: Smallholders’ preferences for contract design attributes," Food Policy, Elsevier, vol. 40(C), pages 14-24.
    7. Clot, Sophie & Stanton, Charlotte Y., 2014. "Present bias predicts participation in payments for environmental services: Evidence from a behavioral experiment in Uganda," Ecological Economics, Elsevier, vol. 108(C), pages 162-170.
    8. Geussens, Katrien & Van Den Broeck, Goedele & Vanderhaegen, Koen & Verbist, Bruno & Maertens, Miet, 2018. "Farmers' perspectives on payments for watershed services in Uganda," Working Papers 276470, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    9. Diendéré, Achille Augustin & Kaboré, Dominique, 2023. "Preferences for a payment for ecosystem services program to control forest fires in Burkina Faso: A choice experiment," Forest Policy and Economics, Elsevier, vol. 151(C).
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    11. Santos, Rui & Clemente, Pedro & Brouwer, Roy & Antunes, Paula & Pinto, Rute, 2015. "Landowner preferences for agri-environmental agreements to conserve the montado ecosystem in Portugal," Ecological Economics, Elsevier, vol. 118(C), pages 159-167.
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    13. Sophie Clot & Charlotte Stanton, 2014. "Present Bias in Payments for Ecosystem Services: Insights from a Behavioural Experiment in Uganda," Working Papers 14-03, LAMETA, Universtiy of Montpellier, revised Jan 2014.
    14. Nigussie, Yalemzewd & van der Werf, Edwin & Zhu, Xueqin & Simane, Belay & van Ierland, Ekko C., 2018. "Evaluation of Climate Change Adaptation Alternatives for Smallholder Farmers in the Upper Blue-Nile Basin," Ecological Economics, Elsevier, vol. 151(C), pages 142-150.
    15. Mamine, Fateh & Fares, M'hand & Minviel, Jean Joseph, 2020. "Contract Design for Adoption of Agrienvironmental Practices: A Meta-analysis of Discrete Choice Experiments," Ecological Economics, Elsevier, vol. 176(C).
    16. Habtamu Tilahun Kassahun & Bo Jellesmark Thorsen & Joffre Swait & Jette Bredahl Jacobsen, 2020. "Social Cooperation in the Context of Integrated Private and Common Land Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(1), pages 105-136, January.
    17. Geussens, K. & Van den Broeck, G. & Vanderhaegen, K. & Verbist, B. & Maertens, M., 2019. "Farmers’ perspectives on payments for ecosystem services in Uganda," Land Use Policy, Elsevier, vol. 84(C), pages 316-327.
    18. Zandersen, Marianne & Jørgensen, Sisse Liv & Nainggolan, Doan & Gyldenkærne, Steen & Winding, Anne & Greve, Mogens Humlekrog & Termansen, Mette, 2016. "Potential and economic efficiency of using reduced tillage to mitigate climate effects in Danish agriculture," Ecological Economics, Elsevier, vol. 123(C), pages 14-22.
    19. Na-na Wang & Liang-guo Luo & Ya-ru Pan & Xue-mei Ni, 2019. "Use of discrete choice experiments to facilitate design of effective environmentally friendly agricultural policies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(4), pages 1543-1559, August.
    20. Tesfaye, Abonesh & Hansen, James & Kassie, Girma Tesfahun & Radeny, Maren & Solomon, Dawit, 2019. "Estimating the economic value of climate services for strengthening resilience of smallholder farmers to climate risks in Ethiopia: A choice experiment approach," Ecological Economics, Elsevier, vol. 162(C), pages 157-168.

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