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Abstract
Incentive based policies can play an important role in improve agricultural sustainability. This paper applies a Choice Experiment approach to elicit small scale farmers’ preferences for a potential policy scheme. Latent class models were used to analyse the farmers’ responses to investigate their preferences, heterogeneity in preferences and the willingness to accept compensations. The results revealed that farmers are willing to participate however; overall they show an aversion to drastic changes in their farming activities. The analysis suggested that majority of the farmers preferred schemes with shorter contract lengths and moderate reduction in chemical use. Furthermore, the study also informs policy makers by identifying the farm and farmer characteristics that influence farmers’ behaviour.