Heterogeneity of Farmer Preferences Towards Collective Agri‐Environmental Schemes: A Latent Class Analysis for Biodiversity Conservation in Switzerland

ABSTRACT Collective agri‐environmental schemes offer a promising approach to improve biodiversity promotion in agriculture by providing landscape connectivity. However, how to design these schemes to foster participation in the presence of farmers' heterogeneous preferences and perceived transaction costs remains an open question. This paper provides an ex ante analysis of farmers' willingness to participate in collective agri‐environmental schemes, using a discrete choice experiment with 123 Swiss farmers. Using a latent class analysis, we identify four subgroups of farmers with distinct policy design preferences and willingness to participate and find that farmers in these subgroups differ in their socio‐economic and behavioral variables. Our results suggest that policymakers should offer a flexible policy design, enabling farmers to self‐select into certain policy design attributes of collective agri‐environmental schemes.