Evaluating farmer’s participation in a voluntary payment program for water quality protection in the UK uplands

Maintaining drinking water quality is essential to water companies and their customers. However, agricultural non-point source pollution of waterways is a major cause of water quality degradation. In this paper we examine the feasibility of using payments financed by a water company to pay farmers to adjust agricultural land management practices to protect water quality. We use the choice experiment method to measure farmers’ minimum willingness to accept (WTA) requirements under a possible local payment for ecosystem services (PES) program, to adjust agricultural land management practices in Nidderdale and the Washburn valley (Yorkshire, UK). Latent class models and random parameter logit models were used to analyse farmers’ responses to establish their preferences, quantify WTA values and explain the presence of unobserved heterogeneity. Latent class analysis suggests that key farm characteristics can partially explain the observed heterogeneity in preferences and willingness to accept. We use these results to prediction enrollment in the PES program by different types of farmers.