Digging into climate change behaviors

ising temperatures, unpredictable rains, and other effects of climate change mean agricultural producers face more uncertainty every season than ever before. They also face the challenge of continually adapting to a changing climate to produce enough food to feed an increasing global population.

Cover crops — a crop grown for the protection and enrichment of the soil — show a lot of promise for mitigating climate change: increasing yields, reducing erosion, and improving soil quality. But cover crops are not a solution, says Alexis Villacis, assistant professor at the Morrison School of Agribusiness. Although farmers could add them to their soil management toolbox, many, especially those in the tropics, will not, according to Villacis’ recent research published in the journals Advances in Agronomy and Agricultural Economics.

The farmers’ mindset

The paper, “Potential Use of Cover Crops for Soil and Water Conservation, Nutrient Management, and Climate Change Adaptation Across the Tropics,” looked at the use of cover crops and other tools in developing countries such as Villacis’ native Ecuador. But he and his co-authors have not been just trying to understand whether these crops work to moderate climate change; they have also been digging deeper into farmers’ climate change behaviors.

“I’ve lived and conducted research in different developing countries and seen the struggles farmers face,” Villacis says. “They face a lot of uncertainty related to markets, sociopolitical events, and climate change. We have these tools that may help farmers overcome the effects of climate change, but first, we have to understand why farmers may or may not adopt these types of tools.”

Villacis says in many places farmers do not sign up for crop insurance. He wanted to know how he could help change that situation. “By understanding what is going on in their minds and why they behave in a certain way, we might create more effective ‘nudges’ or better policies or tools to help people around the world,” he says.

Our mindsets are affected by several factors, including education, experiences, and demographic characteristics. Also, Villacis says, risk preferences and perceptions influence our behavior. He wants to understand how all this shapes farmers’ decisions to tailor better interventions.

More or less farming risk?

Some behavioral factors he explores in the paper, “Linking Risk Preferences and Risk Perceptions of Climate Change: A Prospect Theory Approach,” include loss aversion and probability distortion. For example, many farmers in developing countries will not invest in crop insurance because they perceive it as a certain loss. “Let’s say crop insurance costs you $10,” Villacis explains. “You are, for sure, paying $10 for it. If you are averse to losses, you will try to avoid this situation because it represents a 100% chance you are going to lose something.” If the probability of losing your crops due to reduced rainfall is only 50%, this may seem like a better option to you, although irrational. This is because the latter scenario doesn’t represent a certain loss and your assessment of probabilities may lead you to think the probability is lower than 50%.

Villacis suggests exploring the implications of using gain contracts versus loss contracts to curb loss-averse behavior among farmers. Loss contracts offer performance incentives as upfront payments that farmers can lose.

A loss contract says, “I am going to pay you $11 per kilogram if you sell me 1,000 kilograms or more of your product. I will pay you less per kilogram if you do not meet the quantity requested.” On the other hand, a gain contract says, “If you produce 900 kilograms of your product, I will pay you $10 per kilogram. I will pay you more per kilogram if you give me a larger quantity.”

“People who are averse to loss will do everything to reach the quantity that makes $11,” Villacis says. “Loss contracts might nudge you to do the best you can because you are afraid to lose. They can also act as a commitment device to improve performance.”

— Jennifer Daack Woolson