Testing participation constraints in contract design for sustainable soil conservation in Ethiopia

► Use of contract design to improve the incentive structure of current coordination mechanisms related to sustainable land use management in Ethiopia. ► Participation constraints are tested under different soil erosion and institutional-economic conditions in a choice experiment targeting 750 farm households. ► Contracts provided by local government offering additional credit, land use security and extension services are an effective means to increase the share of farmers implementing soil conservation measures. ► Farmers living in the most erosion prone areas will take soil conservation measures if the contract price is lower than the income loss suffered from soil erosion. ► Trust in contract terms and conditions, especially land use security, plays a crucial role.