Leveraging livelihood social capital to enhance willingness to pay for the rural human settlements improvement project in China’s ethnic minority villages

China has prioritised Rural Human Settlements Improvement Projects (RHSIP) through substantial public investments aimed at improving socio-ecological conditions of rural areas, particularly in Yunnan Province. This study examines farmers’ willingness to pay (WTP) for the RHSIP and the heterogeneity of participation among ethnic minority villages in Yunnan, focusing on the moderating role of livelihood social capital. Using survey data collected from 863 farmers across 13 cities in Yunnan Province, this study produces key findings. (i) Rural households demonstrate the highest WTP for comprehensive projects that bring meaningful improvements across multiple dimensions of rural human settlements, with WTP approximately twice as high for projects relative to those involving minor improvements. Sanitation improvement projects attract the greatest support. (ii) Personal norms shaped by awareness of social and environmental consequences and a strong sense of ascribed responsibility emerge as significant determinants of WTP. (iii) Livelihood social capital moderates this relationship by reinforcing personal norms, thereby amplifying environmental awareness and responsibility and ultimately elevating WTP. Policies that strengthen social norms and collective responsibility as dimensions of livelihood social capital can help increase WTP and encourage broader participation in the RHSIP. These insights have implications for encouraging participation and financial commitment to the RHSIP in China’s ethnic minority villages where local social structures remain essential to effective policy outcomes. Key policy highlightsPolicymakers should focus on integrating ecological protection with cultural heritage preservation within the RHSIP framework. Implementation should be guided by clear ecological boundaries, appropriate design standards, and early consultation with communities.Minimum service standards for drinking water, sanitation, waste collection, and village roads should be enforced, with solutions adapted to local contexts and clear disclosures of service levels and maintenance roles.Community participation should be encouraged through village committees and cooperatives for long-term involvement. Affordable incentive structures including targeted subsidies and flexible contributions, along with transparent environmental funds, are essential for encouraging participation.