A direct payment policy aimed for the conservation of farmlands in hilly and mountainous areas has been implemented since 2000 in Japan.　Community agreements entered into under the policy that encourage farmland conservation have faced various issues such as aging and decreasing number of farmers.　Improvement of community agreements to meet policy goals is needed.

In this study, we examined the regional factors affecting the propensity toward collective conservation of farmlands in community agreements in hilly and mountainous areas.

Using data taken from community agreements entered under a direct payment policy in hilly and mountainous areas in Shimane Prefecture and data taken from the Census of Agriculture and Forestry, we quantitatively investigated the hypothesis that the propensity toward collective conservation of farmlands and agriculture in community agreements depends on regional management and geographical factors.

Four main findings were obtained.　First, the promotion of collective conservation was affected by regional management factors such as the participation of non-farmers, allocation of subsidies, sharing of agricultural machines, and regional size of the community agreements.　In addition, geographical factors such as the number of farm household members and area of farm management contributed to this promotion.　Second, self-improvement of the agricultural infrastructure was affected by the allocation of subsidies and geographical factors such as the slope angle of farmlands, enclave, and size of farm management.　Third, the promotion of value-added agriculture was affected by the participation of corporations with integration of agreements into a single agreement and geographical factors such as location and rate of engagement of farmers practicing conservation friendly agriculture.　Fourth, the promotion of agricultural product processing was affected by integrating agreements into a single agreement, participation of non-farmers, allocation of subsidies, sharing of agricultural machines, and regional size of the community agreement.

These findings indicate it is important to consider community management systems based on social and geographical conditions in hilly and mountainous areas.

JEL Classification: Q18, Q24, Q28