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Abstract

The Conserv Project, started by the Amazon Environmental Research Institute (IPAM), aims to establish a novel market-based mechanism in the state of Mato Grosso which incentivizes farmers to conserve land that could otherwise be legally deforested. This study applies a choice experiment (CE) to elicit a farmer’s willingness to accept (WTA) compensation indirectly, by asking respondents to choose between strategically designed alternatives, assuming that people's’ preferences are revealed through the choices they make. CEs have become an increasingly popular method to generate information to support the design of environmental markets. The CE survey was implemented in two distinct and interrelated parts. Part 1 composed of focus group discussion exercises to establish the key attributes of the mechanism which would influence farmer decision and their levels, as well as explore other operational aspects of the program affecting the design of the CE. Phase 2 was the implementation of the CE in the Araguaia Valley utilizing a sample of 40 farmers split between cattle ranchers and soy producers. In conclusion, the choice model estimated provides encouraging results. From the limited sample in this preliminary study, model results clearly show that both livestock and soy farmers are likely to be responsive to a market mechanism as proposed by the Conserv project at least in the short to medium term. However, to get widespread adoption the precise policy mechanisms need to be adapted to the specific conditions of heterogeneous rural farm businesses in the two production classes.

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