Investigating Rice Consumers' Preferences for Payment for Ecosystem Services of Sefidrood River

Document Type : Research Article

Authors

• P. Tonakbar
• hamid amirnejad
• somayeh shirzadi Laskookalayeh

Department of Agricultural Economics, Sari Agricultural Sciences and Natural Resources University, Sari, Iran

https://doi.org/10.22067/jead.2021.67055.0

Abstract

Introduction: Among the various available tools in the field of natural resources and environmental management, the payment for ecosystem services (PES) is one of the market-based methods that is considered worldwide to protect the environment and ecosystem. PES is an important method for effective management of natural resources and public goods and one of the tools for managing degraded ecosystems and related environmental and economic services. Considering that Sefidrood is considered as the most important and valuable source of agricultural water supply and aquatic environment in Guilan province, and also the water quality of this important river is in a bad and very bad condition, this study was conducted using PES economic tools through payments by rice consumers in Guilan province to rice farmers and thus encouraging them to take environmentally friendly measures (organic agriculture) to reduce pollution of the Sefidrood River.
 Materials and Methods: This research was conducted using a choice experiment method. In our CE, each PES alternative is described by a set of attributes that include distribution of payments, contract duration, implementing organization, monitoring times, possibility to cancel and payments. First, to investigate the effect of different attributes of PES scheme on rice consumers' willingness to pay and their marginal utility, a conditional logit model was used to compare the results of random parameter logit model and latent class models with a base model. Then, the RPL and LC model was used to further investigate the invisible heterogeneity that exists in the behavior of respondents. The RPL model is an advanced model that allows attributes coefficients to change randomly among respondents. Therefore, instead of estimating a fixed coefficient for each attribute, two coefficients are estimated, which together describe the distribution of heterogeneous preferences of the respondents for this attribute.
Results and Discussion: To confirm the CL model, the independence of irrelevant alternatives assumption was performed using the Hausman-McFadden test. Given that the value of chi-square statistics has become large and significant, therefore, the CL model is not suitable for investigating the effect of attributes on consumer’s willingness to pay, and more advanced models should be used. For this reason, RPL and LC models are estimated. According to the results of the RPL model, the highest willingness to pay is related to the monitoring times therefor indicating that consumers are willing to pay 1347 Tomans for more monitoring. The amount of willingness to pay for the duration of contract and distribution of payments is equal to 1326 and 914 Tomans, respectively, which indicates if the contracts are short-time and also more payments are made to low-income rice farmers, the willingness to pay will increase to 1326 and 914 Tomans, respectively. Based on the results of the LC model, in the first class, except for the contract duration, all other attributes were not statistically significant. In the second class, the distribution of payments, the contract duration and the monitoring times with a positive sign and the implementing organization with a negative sign are significant. Class membership coefficients for organic rice consumers indicate that the likelihood of being in second class depends significantly on the respondents' age, gender, and level of education.
Conclusion: The results of RPL and LC models confirm the existence of heterogeneity in the preferences of organic rice consumers. Therefore, appropriate methods can be used to differentiate organic products and thus improve the utility of consuming these products. Consumers were also more inclined to have a short-time and high monitoring scheme, this result is not unexpected due to the novelty of the scheme. Therefore, it is recommended to start short-time schemes with high monitoring. Consumers also tended to make more payments to low-income rice farmers, so it is recommended that lower-income rice farmers be given priority in implementing the PES scheme. The results of both model showed that the distribution of payments and monitoring times had the highest priority for consumers in choosing the PES scheme, respectively. Therefore, in order to increase the participation of consumers in such schemes, it is recommended to include these attributes in the schemes. Also, although PES is not designed as a tool to reduce poverty, it can increase the incomes of low-income rice farmers and help their livelihoods. Given that such schemes have not yet been implemented in Iran, it is suggested that in order to increase consumer participation, various levels of attributes should be provided to the respondents.

Keywords

• Choice experiment
• Guilan province
• Random parameter Logit
• River pollution
• Willingness to pay

20.1001.1.20084722.1400.35.2.2.4

Main Subjects

• Environment and Natural Resources Economics

References

1. Aslam U., Termansen M. and Fleskens L. 2017. Investigating farmers’ preferences for alternative PES schemes for carbon sequestration in UK agroecosystems. Ecosystem Services 27: 103-112.
2. At A. 1997. The basics of price theory. Seyed Ebrahim Beyzaie, Bu Ali Sina University, First Edition, 223P. (In Persian)
3. Ataei S. 2019. Designing a payment for ecosystem services (PES) scheme in the agricultural sector of Qazvin plain. PhD Thesis, Tarbiat Modares University, Faculty of Agriculture. (In Persian with English abstract)
4. Babran S., and Honarbakhsh N. 2008. Critical water condition in Iran and the world. Scientific Research Journal of Rahbord 16(48): 193-212. (In Persian)
5. Balali H., and Mohammadi M. 2019. Investigating the economic behavior of wheat farmers in Kermanshah to reduce the negative environmental impacts of chemical fertilizers (Application of contingent valuation method). Iranian Journal of Agricultural Economics and Development Research 50(4): 643-657. (In Persian with English abstract)
6. Boxall P.C., and Adamowicz W.L. 2002. Understanding heterogeneous preferences in random utility models, a latent class approach. Environmental and Resource Economics 23: 421-446.
7. Costa M.M. 2011. A participatory framework for conservation payments. Land Use Policy 28: 423–433.
8. Department of Enviroment Islamic Republic of Iran, 2018.
9. Ebadi C. 2000. Microeconomics. Tehran, Publication of the Semat, Second Edition.
10. Farley J., and Costanza R. 2010. Payments for ecosystem services: From local to global. Ecological Economics 69(11): 2060-2068.
11. Firoozzare A. 2018. Spatial investigation of farmers’ collective and individual actions for acceptance of agrienvironmental schemes of water-related ecosystem services improvement. PhD Thesis. Ferdowsi University of Mashhad Faculty of Agriculture. (In Persian with English abstract)
12. Ghorbani M., Nemati A., and Ghorbani R. 2010. Studying the willingness to pay of wheat farmers to control weeds in diffrenet growth stages (case study of Khorasan Razavi). Journal of Agricultural Economic and Development 25(1): 20-28. (In Persian with English abstract)
13. Golestanian M., Nabieyan S., and Mirzaei khslilabad H. 2019. Factors affecting the selection of agricultural contracts from the viewpoint of farmers in the county of Bardsir: method of mixed logit. Iranian Journal of Agricultural Economics and Development Research 51(2): 263-278. (In Persian with English abstract)
14. Greene W.H. 2003. Econometric Analysis. Fifth edition. Macmillan, New York.
15. Greene W.H., and Hensher D.A. 2003. A latent class model for discrete choice analysis: contrasts with mixed logit. Transportation Research Part B-Methodological 37(8): 681-698.
16. Hanley N., Wright R.E., and Alvarez-Farizo B. 2007. Estimating the economic value of improvements in river ecology using choice experiments: an application to the water framework directive. In environmental value transfer: Issues and methods, (pp. 111-130). Springer, Dordrecht.
17. Hanley N., Wright R.E., and Koop G. 2002. Modelling recreation demand using choice experiments: climbing in Scotland. Environmental and Resource Economics 22(3): 449-466.
18. Hansen K., Duke E., Bond C., Purcell M., and Paige G. 2018. Rancher preferences for a payment for ecosystem services program in southwestern Wyoming. Ecological Economics 146: 240-249.
19. Hausman J., and McFadden D. 1984. Specification tests for the multinomial logit model. Econometrica: Journal of the Econometric Society 1219-1240.
20. Hoyos D. 2010. The state of the art of environmental valuation with discrete choice experiments. Ecological Economics 69(8): 595-1603.
21. Johnson R., and Orme B. 2003. Getting the most from CBC. Sequim: Sawtooth Software. Research Paper Series, Sawtooth Software.
22. Haile K., Tirivayi N., and Tesfayeb W. 2019. Farmers’ willingness to accept payments for ecosystem Services on agricultural land: The case of climate-smart agroforestry in Ethiopia. Journal of Ecosystem Services 39: 100964.
23. Kalashami M.K., and Peykani GH. 2014. Economic valuation of sufficient and guaranteed irrigation water supply for paddy farms of Guilan province. Rural Development Strategies 1(2): 1-1. (In Persian with English abstract)
24. Kavoosi Kalashemi M., Heidari Shalmani M., and Nazari M.R. 2016. Estimating willingness to pay for organic rice in urban households of Guilan province. Journal of Environmental Science 13(1): 113-124. (In Persian with English abstract)
25. Lancaster K.J. 1966. A new approach to consumer theory. Journal of Political Economy 74(2): 132-157.
26. Lashnizand M., Parvaneh B., and Bazgir M. 2011. Effects of dehydration and irrigation periods on surface water quality in Kashkan watershed. Quarterly Journal of Natural Geography 3(8): 111-125. (In Persian with English abstract)
27. Louviere J., Hensher D.A., and Swait J. 2000. Stated choice methods, Analysis and application. Cambride University Press, U.K.
28. McFadden D., and Train K. 2000. Mixed MNL models for discrete response. Journal of Applied Econometrics 15(5): 447-470.
29. McFadden D. 1974. Conditional logit analysis of qualitative choice behavior. In: Zarembka, P. (Ed.), Frontiers in Econometrics, Academic Press, New York, 105-142.
30. Muradian R., Corbera E., Pascual U., Kosoy N., and May P.H. 2010. Reconciling theory and practice: An alternative conceptual framework for understanding payments for environmental Ecological Economics 69: 1202-1208.
31. Nordén A. 2014. Payment types and participation in payment for ecosystem services programs: Stated preferences of landowners.
32. Orme B. 1998. Sample size issues for conjoint analysis studies. Sequim: Sawtooth Software Technical Paper.
33. Pishbahar E., Mahmoodi H., and Hayati B. 2018. Investigating non-attendance of attributes in choice experiment with endogenous attribute non-attendance (Case study: Organic tea consumers in Tehran). Iranian Journal of Agricultural Economics and Development Research 50(3): 437-449. (In Persian with English abstract)
34. Ruto E., and Garrod G. 2009. Investigating farmers' preferences for the design of agri-environment schemes: A choice experiment approach. Journal of Environmental Planning and Management 52(5): 631- 647.
35. Thurstone L.L. 1927. A law of comparative judgment. Psychological Review 34(4): 273.
36. Train K.E. 1998. Recreation demand models with taste differences over people. Land Economics 74(2): 230-239.
37. Vorlaufer T., Falk T., Dufhues T., and Kirk M. 2017. Payments for ecosystem services and agricultural intensification: evidence from a choice experiment on deforestation in Zambia. Ecological Economics 141: 95-105.
38. Wunder S. 2007. The efficiency of payments for environmental services in tropical conservation. Conservation Biology 21(1): 48-58.