Do Flood Hazards Affect Risk Attitudes? An Experimental Analysis in Agriculture-Dependent Communities in Cameroon

Abstract

Problem: That flood hazards affect agriculture is common knowledge. However, how flood hazards affect risk attitudes is not fully known. This work models the influence of flood hazards on risk attitudes in agriculture-dependent communities. Study Design: We elicit risk attitudes among victims and non-victims from three agriculture-dependent flood hazard communities in Cameroon.  Methodology: Data collection took place in December 2016, using a combination of structured questionnaires and field experiments. Collected data was entered and analyzed using SPSS version 20.0. Results: Hypothetical results from questionnaires showed similarity in risk aversion between victims and non-victims prior to flood hazards (78.4% and 69.3% respectively, p=.40). Similar attitudes were practically reported immediately after the flood hazards. However, higher but insignificantly different risk taking attitudes were observed for both victims (54.2%) and non-victims (68%) after the first experimental game (p=.30). Overall, risk taking increased in game 2. Both victims and non-victims demonstrated higher risk taking attitudes in the second iteration (≈72%  and 90% respectively), with more non-victims (22%) becoming risk takers than victims (18%). Wins in the first iteration could have largely influenced the increasing risk taking attitudes observed in game 2. Conclusion: We contend that flood hazards can directly enhance risk taking attitudes among flood victims in agriculture-dependent communities, based on the desire to overcome negative impacts and restore livelihoods. Non-victims rather take risks to improve their capacity to buffer future flood hazards and avoid similar suffering of victims. Further research is however needed to ground these contentions.