Climate risk management decision-making among farmers-a heuristic analysis

Abstract

Climate change is posing a significant threat to agriculture, disrupting farming systems and jeopardizing food security in vulnerable regions. Understanding how farmers make decisions to manage climate risks is crucial for enhancing agricultural resilience and ensuring the sustainability of agri-food systems. In this context, the study aimed to explore climate risk management decision-making among rice farmers in Kerala and Maharashtra. The specific objectives followed in the study were exploring the behavioural and cognitive assumptions used by farmers in decisions related to climate change risks, profiling of the climate-risk decisions of the farmers, documentation and evaluation of the heuristics which serve as a basis for climate risk decisions of farmers and evolving a heuristics framework for categorizing risk adaptation strategies in agriculture. Following expost facto research design, the study purposively selected Alappuzha in Kerala and Gondia in Maharashtra due to their high vulnerability to climate-related risks related to flood and drought respectively. A total of 150 farmers (75 from each district) were randomly selected to represent diverse perspectives on climate risk strategies. Preferred Reporting Items for Systematic Reviews (PRISMA) guidelines and Meta-Analyses were used in the selection and analysis of research papers related to the decision-making processes of farmers during 1990-2023 downloaded from popular research databases viz. Google Scholar, Scopus and Research Rabbit. The search term used has been Topic = (climate change OR climate variability OR climate adaptation) AND (risk management OR adaptation strategies) AND (heuristics AND rational decisions) AND (farm* OR Agriculture). From the 1950 search results screened on the topic, 28 comprehensive results were delineated using specific exclusion and inclusion criteria. It comprised 14 heuristic decision-based papers and 14 rational decision-based papers related to climate risk decisions of small and marginal farmers. The analysis revealed farmers’ behavioural and cognitive assumptions in rational and heuristic decisions. The results found that many farmers utilized structured approaches, such as prioritizing high-value crops, balancing short term costs with long-term benefits, and employing scenario planning and economic forecasting to prepare for diverse climate outcomes. Heuristic approaches included availability, representativeness and affect shortcuts, which guided farmers’ intuitive, quick responses to climate risks. It was also observed that although socio demographic factors impact decision-making, there were no significant differences in influence on rational and heuristic decision-making. The overall pooled effect size was 0.008 with a 95 per cent confidence interval that ranged from -0.520 to 0.536. The small value of the overall pooled effect size indicates a balanced use of planning and intuition in managing climate challenges by small and marginal farmers. The results reflect the nuanced and adaptive nature of farmers’ decision-making, demonstrating a strategic mix of planning and intuitive judgment in the face of climate challenges. Building on the exploration of socio-demographic factors, the study employed DEMATEL (Decision-Making Trial and Evaluation Laboratory) analysis to examine the psychological drivers influencing farmers’ climate risk management strategies. DEMATEL helped to identify and analyse causal relationships among complex factors, providing insight into how key psychological attributes influence farmers’ strategies. In Alappuzha, Kerala, market orientation (32.31) and risk preparedness (27.26) stood out as major causal factors shaping decision-making. Conversely, in Gondia, Maharashtra, scientific temperament (1.36), risk aversion (0.991), risk orientation (0.230), and innovation proneness (0.019) emerged as the key drivers, reflecting a preference for scientifically informed and cautious approaches in the region. Overall, the results reinforce the need to focus on psychological factors to enhance farmers’ adaptive capacities in the face of climate challenges. Climate risks were assessed using a risk matrix based on likelihood and severity of perceived risks. In Alappuzha, environmental (24.16) and production risks (20.88) were the highest, followed by market (9.06), financial (6.53), and institutional risks (4.62). In Gondia also, environmental (21.80) and production risks (17.68) were high, but institutional risks (11.09) were medium, and market (5.19) and financial (4.12) risks were low. Alappuzha farmers’ better financial situation, insurance coverage, and access to institutional credit enable them to adopt more robust adaptive strategies, supported by community participation and infrastructure. Gondia farmers, with lower income, limited insurance, and reliance on informal credit, focus on medium-level institutional risks. These regional differences highlight the need for tailored interventions to address specific resilience needs and risk perceptions in each area. Documentation of heuristics followed by farmers found imitation and availability shortcuts to play a crucial role in farmers’ climate risk management decisions. In Alappuzha, 56 per cent of farmers were found to be high imitators, adopting successful practices from peers and showing a proactive approach to climate risks. Also, 57.33 per cent of the farmers have a high threshold of concern for climate challenges. In Gondia, with more resource constraints, only 25.33 per cent have a high threshold of concern, while 46.66 per cent have a low threshold. This highlights how heuristics shape adaptive strategies differently across regions, emphasizing the need for tailored interventions to improve decision-making effectiveness and resilience among farmers facing diverse climate risks. The study analyzed the interplay between generic and specific capacities of strategies followed by farmers in agricultural risk management. In Alappuzha, farmers navigate the safe development paradox by employing flood management strategies and cultivating salt-tolerant varieties, which provide immediate relief but may create long-term sustainability challenges. Conversely, farmers in Gondia utilize soil and water conservation techniques and drought-resistant crops, reflecting a high generic capacity but lower specific capacity in their risk management approaches. Both regions face a poverty trap due to financial insecurity, with Alappuzha farmers using small loans and Gondia farmers relying on informal credit, increasing their vulnerability to climate shocks. Thus, it could be concluded that the farmers’ climate risk decisions are driven by heuristics like imitation and experience-based shortcuts, not just rational analysis. In Alappuzha, market orientation and risk preparedness guide decisions, while Gondia farmers relied more on scientific temperament and risk aversion, showing region specific heuristic responses. Environmental risks like floods and droughts lead farmers to use shortcuts like availability, making their strategies reactive, especially with lower concern thresholds. Therefore, improving institutional support and access to climate-smart technologies is recommended to help farmers go beyond heuristics and build long-term resilience.