Designing a payments for ecosystem services (PES) program to reduce deforestation in Tanzania: An assessment of payment approaches

- We survey farmers' preferences for PES in Tanzania using a choice experiment.
- Both cash and non-cash payments to individual farmers may motivate participation.
- A group cash payment made to a village fund may not motivate participation.
- WTA values are similar to average opportunity costs of conservation.
- Preferences for program conditionality are found to be non-linear.

Payments for ecosystem services (PES) programs aim to improve environmental outcomes by providing direct incentives to land managers for the provision of ecosystem services. Participation in PES programs is voluntary, so effective program design requires careful consideration of farmers' preferences. This study quantifies such preferences using a choice experiment. The study site is the East Usambara Mountains, Tanzania, an internationally recognized 'biodiversity hotspot.' We assess preferences for four payment approaches: constant and variable annual cash payments to individual farmers, a constant annual cash payment to a village fund on behalf of farmers, and an upfront manure fertilizer payment. We find that the manure fertilizer payment was statistically significant in motivating farmer participation while the group payment was non-significant. In addition, the relationship between the likelihood of participation and the stringency of conditionality is surprisingly non-linear. In a test of external validity, average willingness to accept (WTA) values are found to be similar to the average opportunity cost of maintaining land uses consistent with conservation objectives.