Abstract

Nearly all Agri-Environmental Schemes (AES) today propose stable annual payment over the duration of the contract. Yet other sequences of payment could be implemented. The standard discounted utility model for instance predicts that individual should prefer a decreasing sequence of payments if total sum of outcomes is constant. The perspective of seeing its own situation improved in the future, loss aversion or recency effects on the reverse can lead individuals to prefer increasing sequence of payment. To understand the preferences of farmers over various potential sequences of payment, we propose a review of the literature in psychology and economics on the mechanisms affecting payment sequence choices. We then test the preference for stable, increasing, or decreasing sequences through a choice experiment survey. In this survey farmers are proposed hypothetical contracts rewarding the implementation of cover crops. The choice cards are based on repeated exchanges with local stakeholder and 123 French farmers (10% of the farmers that received the online survey) answered the survey. Overall, farmers do not present a clear willingness to depart from the commonly proposed stable payments. Nevertheless, 17% declare that increasing sequences of payment are their favorite ones. Moreover, preferences over decreasing sequence of payment are heterogeneous. Contradicting the discounted utility model, there is a significant rejection of decreasing payments from a fraction of farmers. These farmers have lower discount rates and are more risk-lover than the average farmer.

Practical information