Peer Effects in Landowner Participation: Evidence from a Forest Incentive Program

Abstract

Identifying landowners' social interactions helps garner a better understanding of non-pecuniary incentives in their participation decision in an incentive-based program for conserving private lands. However, little is known in the literature about such peer effects among neighboring landowners. This study uses contract data from a forest incentive program implemented in a Japanese mountainous area with over 200 small local communities to estimate peer effects on individual participation. We identify peer effects using a binary choice model with social interactions, in which landowners are assumed to form heterogeneous expectations of community members' participation. The results reveal that their peers' participation significantly increases the likelihood of individual participation, suggesting peer effects are relevant for conservation policy design. Using the results, we demonstrate how including peer effects in the analysis improves policy predictions in estimating the impact of interventions and understanding the spatial configuration of participating land.