Costs and Perceptions Conditioning Willingness to Accept Payments for Ecosystem Services in a Brazilian Case

Abstract

This study analyzes the willingness of farmers to accept payments for ecosystem services in the Paraíba do Sul River basin applying a contingent valuation methodology. Ecosystem services would be those resulting from forest conservation and regeneration and sustainable and innovative production practices. The results suggest a regressive bias when some variables that capture the income effect positively affect participation in the program and acceptance of the payment offered. There is also evidence of adverse selection when acceptance of the amount offered is more sensitive to the service provision already being suited to the modes of production adopted. The results, on the other hand, indicate that farmers' decisions to join the program depend not only on their opportunity costs, but also on their perceptions about specific issues, such as their environmental knowledge or awareness, inertia to change production modes, fear of additional monitoring, and level of understanding of the program. These results are important to support the program's outreach strategies and the design of mechanisms for the selection of beneficiaries and pricing of payments.