Catastrophic risk perceptions and attitudes in aquaculture: Evidence from flood prone areas of Bangladesh

Abstract

Aquaculture is still an emerging industry that is highly dependent on the environment and more unstable than other conventional agricultural operations. Diverse environmental and production hazards must be managed by aquaculture farmers for sustainability. Farmers' decisions on farm operations and risk management are significantly influenced by their risk attitudes and perceptions of risk. However, few empirical studies on risk management have been done, but literature on aquaculture is scarce. In light of this knowledge vacuum, the current study investigated how farmers perceive catastrophic risk and their attitudes toward various sources. The information was gathered using a stratified random sample method, with 300 aquaculture farmers interviewed from two major flood-prone regions in Bangladesh. A cubic utility function and the Equally Likely Certainty Equivalent (ELCE) approach were used to quantify farmers' risk aversion. The risk matrix technique was used to assess farmers' perceptions of risk. The effects of socioeconomic factors on farmers' risk attitudes were examined using a Logit model. Floods, strong rains, and pest and diseases all posed potential productivity hazards and most farmers were risk averse in nature. Age, educational position, income, and land proprietorship were the most important predictors of risk attitude, while social and agricultural characteristics had little influence on farmers' risk perceptions. The study's findings will eventually allow policymakers to forecast the suitable risk management measures for the aquaculture farmers in Bangladesh.