A Payment Scheme for the Ecosystem Services of Mountain Grasslands Embedded in Dairy Products

Abstract

We explore the economic feasibility of a payment scheme for the ecosystem services provided by mountain pastures in the Italian Alps and Apennines. Traditional mountain livestock farms are the main guardians of these ecosystems that they contribute to preserve by grazing and mowing sustainably. According to the payment scheme proposed, these farmers’ effort could be compensated by enabling them to market the extra value of their products that is due to the ecosystem services they embed. The feasibility of this approach depends on two conditions. The first is a reduction of the information asymmetries between producers and consumers on the actual characteristics of the products. This can be ensured if local governments design certification and monitoring standards that provide credible evidence on the environmental content of the products. The second is a positive willingness-to-pay of consumers for the direct and indirect benefits they can derive from those products. In this paper, we use a discrete choice experiment to estimate the preferences of a large representative sample of Italian consumers for a set of selected mountain pastures ecosystem services. We find that the willingness-to-pay associated with the services considered is sufficiently large to support the local development of a payment scheme.

Keywords: Ecosystem Services, Descrete Choice Experiments, Mixed Logit, Local Policy