How Does Identity and Risk Appetite Shape Preferences for Agri-Environmental Contracts?

A new study finds that farmer identity influences contract choices more strongly than risk aversion, with implications for how biodiversity schemes are designed and offered.

Agri-environmental schemes are a primary tool for encouraging farmers to manage land for biodiversity, but uptake varies widely. Understanding what drives farmers’ choices between different contract designs is essential for improving scheme effectiveness. A new project-funded study published in Q Open uses a large-scale discrete choice experiment across three countries to examine how farmer identity and risk preferences shape willingness to participate in public and private agri-environmental contracts.

What did the study involve?

Researchers surveyed 767 farmers in the United Kingdom, France, and the Netherlands, presenting them with choices between hypothetical agri-environmental contracts that varied in payment type (per-hectare or results-based), contract organiser (government or private buyer), and the option to participate as part of a farmer cluster. Alongside the choice experiment, each farmer completed a self-assessment of their professional identity (the degree to which they saw themselves as food producers, environmental stewards, or business managers) and their attitudes towards financial risk. This allowed the researchers to test whether these psychological factors predicted contract preferences independently of farm size, type, and other structural characteristics.

What did they find?

Across all three countries, farmers showed a clear preference for government-organised contracts over those offered by private buyers, for per-hectare payments over results-based payments, and for contracts that included the option to join a farmer cluster. Strikingly, farmer identity, specifically the degree to which farmers saw themselves as environmental stewards, had a stronger influence on contract preferences than risk aversion. Farmers with stronger stewardship identities were more willing to accept results-based payment schemes and were more open to private contracts, while risk-averse farmers were more cautious but less markedly so than identity effects would predict.

The study also revealed substantial preference heterogeneity both within and between countries, suggesting that one-size-fits-all scheme designs are unlikely to maximise participation. For example, French farmers showed stronger preferences for government contracts than their British or Dutch counterparts, while the influence of stewardship identity on willingness to accept results-based payments was consistent across all three samples. The finding that cluster membership was consistently valued across countries provides further evidence that collaborative approaches can make agri-environmental schemes more attractive to farmers, reinforcing the case for landscape-level coordination through farmer clusters. For policymakers, these results suggest that targeting communication around environmental stewardship may be more effective at increasing uptake than simply reducing financial risk through higher payment rates.

Read the paper

The full open-access paper is available from Q Open. For more on FRAMEwork’s research into how farmer clusters and incentive mechanisms support biodiversity, see our related publications on farmer identity in clusters and results-based payments for agrobiodiversity. Browse all FRAMEwork publications at framework-biodiversity.eu/publications.