Investigating rice farmers' preferences for an agri-environmental scheme: Is an eco-label a substitute for payments?

In some Asian countries, the pursuit of high yields often leads to excessive application of chemical fertilizer, negatively impacting the environment. We use the Choice Experiment approach to investigate the preferences of rice farmers in Taiwan for a potential Agri-environmental Scheme (AES), which would aim at an optimization of fertilizer use. We are especially interested in how such an AES would optimally be designed and whether it is possible to reduce its costs by offering the farmers lower payments in exchange for an eco-label. We find that farmers have a significant preference for an eco-label and would accept lower payments in exchange. They also prefer to retain some flexibility and keep some land out of the AES. Moreover, we also find that a share of the farmers would never join an AES.