The Optimal Design of Agri-Environmental Contracts Aimed at Reducing Methane Emissions from Dairy Production in Poland

Methane emissions from dairy production constitute a significant share of agricultural greenhouse gas emissions in Poland and represent a key challenge under EU climate policy and the Common Agricultural Policy (CAP). This study evaluates dairy farmers’ acceptance of alternative methane mitigation measures (MMMs) and examines the cost-efficient design of agri-environmental contracts from a public-budget perspective. A Discrete Choice Experiment (DCE) conducted among 302 dairy farmers was used to estimate participation probabilities for different mitigation measures and contract attributes, including result-based (RB) and input-based (IB) payment schemes. These preference-based probabilities were subsequently embedded into a cost-minimisation optimisation framework that identifies the least-cost portfolios of MMMs capable of achieving increasing methane-reduction targets while remaining behaviourally feasible. The DCE results show significantly higher acceptance of RB contracts compared with IB schemes, strong resistance to vaccination-based measures, and relatively favourable preferences for biofiltration. Payment levels and environmental attitudes significantly influence participation decisions. When behavioural constraints are incorporated into the optimisation model, RB contracts allow for higher achievable methane reductions under the adopted assumptions, primarily due to higher participation rates of farmers in result-based contracts. The model indicates that, beyond moderate mitigation targets, IB schemes face participation limits that constrain scalability. Biofiltration consistently forms the backbone of cost-efficient portfolios, while less accepted measures enter optimal solutions only when ambition levels exceed the feasible potential of high-acceptance options, revealing a potential ambition–acceptance gap. Methodologically, the study integrates stated-preference data into a policy optimisation model, demonstrating how farmers’ quantified perceptions can be treated as structural inputs to environmental policy design rather than assuming full adoption of technically efficient measures. Conceptually, the framework links farmer participation, environmental effectiveness, and budget efficiency within a unified decision-support structure. The proposed framework contributes to sustainability-oriented policy design by linking environmental effectiveness, behavioural feasibility, and public-budget efficiency in methane mitigation strategies for the dairy sector. Although the results are scenario-based and conditional on assumed mitigation and cost parameters, they underline the importance of aligning environmental ambition with empirically grounded participation patterns when designing methane mitigation policies for the dairy sector.