Farmers’ perspectives on payments for ecosystem services in Uganda

Payments for ecosystem services (PES) is a market based policy tool that is increasingly being recommended for effective and sustainable management of watersheds, especially for Sub-Saharan Africa, where soil and watershed degradation are currently very severe. The design of PES projects is challenging and insights in the local context are indispensable. Using a choice experiment, this study investigates the perspective of farmers on the design of a PES program in the Mount Elgon region in Uganda. We use mixed logit and latent class models to reveal and explain preference heterogeneity for PES attributes. We calculate willingness to accept values and perform a cost analysis to identify the most cost-efficient PES programs. Our results point to a strong willingness of farmers to participate in a PES contract. The majority of farmers are willing to adopt different conservation measures, even in absence of a compensation; a minority of farmers are strongly averse to buffer strips along the river and do require a significant compensation. We find that farmers have strong preferences for individual over communal compensation, and that additional in-kind rewards in the form of labour assistance or tools increase the willingness to accept a contract. The findings imply that PES is a promising avenue for improved watershed conservation in the Mount Elgon region; and that individual compensation, differentiation and specific targeting of such programs may benefit their cost effectiveness.