New Risk Management Findings Has Been Reported by Investigators at Boston University (Prosocial Preferences Improve Climate Risk Management In Subsistence Farming Communities): Risk Management

2024 MAR 25 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Research findings on Risk Management are discussed in a new report. According to news reporting originating in Boston, Massachusetts, by NewsRx journalists, research stated, “Several governments have tested formal index-based insurance to build climate resilience among smallholder farmers. Yet, adoption of such programmes has generated concerns that insurance may crowd out long-established informal risk transfer arrangements.”

Financial supporters for this research include Social Sciences and Humanities Research Council of Canada (SSHRC), Center for Policy Research on Energy and the Environment at Princeton University, Social Sciences and Humanities Research Council of Canada (SSHRC), Oxford Martin Programme on Systemic Resilience.

The news reporters obtained a quote from the research from Boston University, “Understanding this phenomenon requires new analytic approaches that capture dynamics of human social behaviour when facing risky events. Here we develop a modelling framework, based on evolutionary game theory and empirical data from Nepal and Ethiopia, to demonstrate that insurance may introduce a new social dilemma in farmer risk management strategies. We find that while socially optimal risk management is achieved when all farmers pursue a combination of formal and informal risk transfer, a community of self-interested agents is unable to maintain this co-existence under rising climate risks. We find that a combination of prosocial preferences-moderate altruism and solidarity-helps farmers overcome these concerns and achieve the social optimum. In our model, behavioural interventions that cue such preferences can reduce farmer expected losses by 26% and save approximately 5% of community agricultural income through reduced premium subsidies under climate risk levels likely to emerge in the coming decades. Optimal risk management involves maintaining formal and informal risk instruments, which is difficult under increasing climate risks.”

According to the news reporters, the research concluded: “A study now investigates the issue and finds that policies cultivating moderate altruism and solidarity can help farmers better manage climate risks.”

This research has been peer-reviewed.

For more information on this research see: Prosocial Preferences Improve Climate Risk Management In Subsistence Farming Communities. Nature Sustainability, 2024. Nature Sustainability can be contacted at: Nature Portfolio, Heidelberger Platz 3, Berlin, 14197, Germany.

Our news correspondents report that additional information may be obtained by contacting Nicolas Choquette-Levy, Boston University, Dept. of Earth and Environment, Boston, MA 02215, United States. Additional authors for this research include Michael Oppenheimer, Elke U. Weber, Matthias Wildemeersch, Fernando P. Santos and Simon A. Levin.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1038/s41893-024-01272-3. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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