Farmers' preferences for the design of an agglomeration bonus in the context of peatland restoration

This paper investigates how the specific design of an agglomeration bonus affects farmers' willingness to participate in a stylised peatland restoration scheme. The analysis is based on a discrete choice experiment with 110 farmers from peatland regions in northwest Germany. The results suggest that, relative to the scheme's land-use restrictions, the agglomeration bonus plays a minor role in the decision to participate in the scheme. The bonus had no statistically significant effect in the mixed logit estimations and was mostly ignored in the decision-making process. Only when preferences are adjusted for attribute non-attendance does the bonus enhance willingness to participate and the scheme's cost-effectiveness. Respondents who did not ignore the attributes of bonus design preferred a lump sum payment at the start of the scheme to an annual disbursement of the bonus, and an area-based bonus to a neighbourhood bonus. More generally, the results suggest that only mediocre levels of commitment on the part of farmers can be achieved through a voluntary approach. More ambitious peatland restoration, which may be necessary to achieve the reduction targets in the LULUCF sector, will need to combine incentive systems with regulatory or planning instruments.