Agri-environmental policy valuation: Farmers' contract design preferences for afforestation schemes

Many regions in the EU aim to increase their forest cover in order to expand timber production, sequester CO2 or to provide more opportunities for recreation. Despite funding opportunities to support afforestation on private land, some of these regions do not succeed in enhancing their forest area. The objective of this study is to explore the institutional, economic and ecological conditions that would encourage farmers to enrol in an agri-environmental scheme for afforestation in Saxony, Germany. Using choice experiments and qualitative interviews, farmers' demand for varying contract designs is estimated. The findings show that farmers have a strong disutility for large forests and long contracts and would be willing to receive less subsidy if they receive technical forest management advice and have the opportunity to return to agricultural land-uses after the contract ends. Biodiversity and ecosystem service related factors (species' diversity, timber production and recreational access) do not significantly influence farmers' choices.