What incentives motivate smallholder farmers to reduce deforestation? Evidence from Nigeria's rainforest region

Deforestation has persistently undermined forests' critical role in providing environmental services and livelihood support. In developing countries like Nigeria, small-scale agriculture significantly drives deforestation. This study analyzes farmers' preferences for incentives to reduce deforestation and its influencing factors using data from 634 smallholder farmers in Cross Rivers State, located in Nigeria's rainforest region. The Conditional Mixed Process (CMP) was used to analyze farmers’ preference for financial incentives, while the multinomial probit model was used to analyze farmers’ preference for non-financial incentives and their influencing factors. The results suggest that farmers have differential preferences for incentives, with 38 percent and 42 percent having a preference for financial and non-financial incentives, respectively. The farmers' choice of non-financial incentives includes providing farm processing facilities, farm inputs, employment opportunities for youths and entrepreneurship training programs. Interestingly, 20 percent of the farmers were unwilling to accept any incentives but would rather continue clearing new forest areas. Furthermore, the findings suggest that farmers' socioeconomic and institutional factors significantly shape their choice of incentives. We argue that providing homogenous incentives for farmers may not necessarily address agricultural driven deforestation. Hence, incentive policies should account for the diversity in smallholder farmers’ preferences for sustainable deforestation reduction.