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| Several discrete choice experiment studies have investigated issues in the design of incentive programs to enhance the provision of ecosystem services. In these studies, ownership of land is usually private, and landowners make decisions independently of each other. However, the assumption of independence may be invalid when decision making involves a spatial setting and social networks. This study presents a new approach that accounts for social cooperation and preference interdependence across farmers in a land management context with mixed ownership. We formulate an econometric model of implicit choice set formation that accounts for (1) farmers’ expectations regarding mutual positive benefits from cooperation in an integrated land management system, and (2) the potential interdependence of preferences across farmers within the same socio-spatial group. We show that cooperation expectations matter for the decision of whether to engage in cooperative management and also for welfare estimates. Our model can identify sources of heterogeneities arising from cooperation expectations in ways that would not be possible using a reduced-form choice model. The assumption of independence should be checked routinely in similar settings to avoid potential endogeneity problems in discrete choice models when dealing with data that have a social-spatial dimension. | |
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