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Prosocial preferences improve climate risk management in subsistence farming communities

Nature Sustainability volume 7, pages 282–293 (2024)Cite this article

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Abstract

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. 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.

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Fig. 1: Overview of the evolutionary game theory model.
Fig. 2: Community outcomes for monomorphic risk management strategies.
Fig. 3: Decomposition of household utility components.
Fig. 4: Equilibrium risk transfer strategies for self-interested farmers.
Fig. 5: Effect of alternative social preferences on risk management equilibria.
Fig. 6: Effect of financial policy incentives and prosocial preferences on risk management strategy choices.

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Data availability

Data sources used to support this analysis include Chitwan Valley Family Study—Labour Outmigration, Agricultural Productivity and Food Security, Nepal (ICPSR 36755) (https://www.icpsr.umich.edu/web/DSDR/studies/36755/versions/V5); IBLI Borena Household Survey R1-4 Stata 13 data (https://data.ilri.org/portal/dataset/ibli-borena-r1/resource/41b75ad5-71cd-4d23-911c-dcce53bc68a7); and SPEI (https://spei.csic.es/database.html).

Code availability

The game theory model for this study was developed via Python 3 software and is available via a Zenodo repository at https://doi.org/10.5281/zenodo.8347265.

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Acknowledgements

N.C.L. acknowledges financial and organizational support from the Center for Policy Research on Energy and the Environment at Princeton University and the International Institute for Applied Systems Analysis, as well as financial support from the Social Sciences and Humanities Research Council of Canada (752-2020-077). M.W. acknowledges funding received from the Oxford Martin Programme on Systemic Resilience.

Author information

Author notes

  1. These authors contributed equally: Nicolas Choquette-Levy, Matthias Wildemeersch.

Authors and Affiliations

  1. Department of Earth and Environment, Boston University, Boston, MA, USA

    Nicolas Choquette-Levy

  2. School of Public and International Affairs, Princeton University, Princeton, NJ, USA

    Nicolas Choquette-Levy, Michael Oppenheimer & Elke U. Weber

  3. Environmental Change Institute, University of Oxford, Oxford, UK

    Matthias Wildemeersch

  4. International Institute for Applied Systems Analysis, Laxenburg, Austria

    Matthias Wildemeersch

  5. Informatics Institute, University of Amsterdam, Amsterdam, the Netherlands

    Fernando P. Santos

  6. Department of Ecology and Evolutionary Biology, Princeton University, Princeton, NJ, USA

    Simon A. Levin

  7. High Meadows Environmental Institute, Princeton University, Princeton, NJ, USA

    Simon A. Levin & Michael Oppenheimer

  8. Department of Geosciences, Princeton University, Princeton, NJ, USA

    Michael Oppenheimer

  9. Andlinger Center for Energy and the Environment, Princeton University, Princeton, NJ, USA

    Elke U. Weber

  10. Department of Psychology, Princeton University, Princeton, NJ, USA

    Elke U. Weber

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Contributions

N.C.L. and M.W. conceived of and developed an initial design for the study and drafted the initial manuscript. F.P.S., S.A.L., M.O. and E.U.W. proposed modifications incorporated in the final design. N.C.L. wrote the model code. N.C.L. and M.W. analysed model results. All authors contributed to drafting the final manuscript.

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Correspondence to Nicolas Choquette-Levy or Matthias Wildemeersch.

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Choquette-Levy, N., Wildemeersch, M., Santos, F.P. et al. Prosocial preferences improve climate risk management in subsistence farming communities. Nat Sustain 7, 282–293 (2024). https://doi.org/10.1038/s41893-024-01272-3

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