Do Bonus Payments Enhance Agri-environmental Payments? Empirical Findings from Rice Farming in Japan

Agri-environmental payments (AEP) have been implemented for more than ten years and considered as a primary agri-enviromental policy in Japan. However, program enrollment is close to its peak due partly to budget limitation and rigid payment scheme. It might be possible to increase program participation by introducing some flexible payment schemes. This study investigates the effects of different bonus (extra payment) payments on farmers acceptance decisions of the AEP in Japan. To achieve this objective, we conducted a survey for 576 rice farmers in four prefectures (Akita, Fukui, Shiga, and Shimane). We introduced three hypothetical bonus payments (scale, acquisition, and adjacency) and asked farmers about their possible acceptance. Farmers responses were then used to derive their minimum acceptable bonus levels. Our results show that farmers are quite responsive to scale and adjacency bonus payments, but not to acquisition bonus. Our results also show that there is significant variation in minimum acceptable bonus, reflecting considerable heterogeneity among farmers in the study region. Using these estimated results, Japan s AEP would attract more farmers and achieve significant efficiency gain without substantial budget increase. Acknowledgement :