Farmers’ preferences and willingness to accept climate-smart financial incentives: A discrete choice experiment on conservation agriculture and agroforestry in northwest Ethiopia

Abstract

Climate-induced shocks increasingly threaten agricultural systems and food security in sub-Saharan Africa, where most farmers rely on rain-fed agriculture. Climate-smart agricultural practices (CSA), such as conservation agriculture and agroforestry, can enhance resilience, yet adoption is hindered by financial constraints. Although financial incentives can promote CSA uptake, the design attributes of these incentives, including payment amount, payment duration, payment mechanisms, practice types, and technical assistance, are poorly understood in terms of how they affect farmer preferences. This study employs a discrete choice experiment (DCE) with a mixed logit model to analyze farmers' preferences for CSA incentives, quantify marginal willingness-to-accept (WTA) thresholds (the minimum financial incentive required to adopt CSA practices), and evaluate preference heterogeneity (how differences in socioeconomic and behavioral traits influence incentive preferences). Results reveal that farmers prioritize higher incentive amounts but exhibit distinct trade-offs: they prefer short-term over long-term durations, reflecting temporal discounting driven by upfront costs, and in-kind payments (drought-resistant maize seeds) over cash, indicating a strong demand for tangible inputs. WTA estimates indicate farmers are willing to accept less of an incentive amount for their preferred attributes. Preference heterogeneity emerges, for example, risk-averse smallholder farmers favor short-term incentives, while larger farms prefer long-term incentives. These results suggest tailoring incentives to address farmers' immediate financial needs, risk attitudes, and labor constraints, thereby enhancing the scalability of CSA adoption.