Farmers’ preferences and willingness to accept incentives for adopting sustainable agricultural practices in India

Sustainable agricultural practices are increasingly promoted to mitigate the impacts of climate change on agriculture. However, adoption at the farm level remains limited, often due to trade-offs between tradable and non-tradable ecosystem services. This study examines farmers’ preferences for resource conservation practices and their willingness to accept incentive payments for their adoption in the Indian state of Punjab, where rice has become the most important crop despite its cultivation being unsupportive of its climatic conditions. Following the discrete choice experiment approach, the study included 500 farmers with the following attributes: ecosystem service benefits, income compensation, and carbon credit price. The findings reveal that farmers showed a strong preference for adopting improved farm practices. Saving water and avoiding residue burning are the two most preferred ecosystem benefits by the farmers. However, farmers’ preferences are strongly influenced by factors including carbon credit prices, income compensation, socioeconomic characteristics, and their risk aversion capacity. The estimation of extended random parameter logit (RPL) indicated that switching to direct rice seeding requires compensation of Rs. 29,223/ha and Rs. 29,178/ha for reallocating area from rice to legumes, ceteris paribus. These findings are crucial for policymakers in restructuring the existing incentive structure to accelerate the adoption of resource conservation practices in India.