When the going gets risky, the risk-seekers get going: How climate risk perception and risk attitude affect sustainable practices

Anthropogenic climate change is the biggest challenge humanity is facing. In rural populations of developing countries, where livelihood is highly dependent on natural resources that are increasingly threatened by climate change, the impact of extreme climate events perpetuates poverty and inequality and threatens food security for the growing population, and the sustainability and subsistence of many supply chains. Despite the urgency to deal with this threat through radical actions, organizational responses have so far been inadequate. Implementing more sustainable agricultural practices represents a viable strategy to mitigate the climate risk and reach socio-economic progress while preserving natural resources and long-term stability. Consequently, understanding how vulnerable individuals make sense, manage and cope with the risks they are subjected to becomes essential to foster the diffusion of sustainable practices in the production of many tropical crops and their supply chains, especially in light of the contradictory evidences of the effects of climatic risk perception on sustainability. We contribute to the debate around the effect of climate risk perception on sustainable practices by shedding light on the crucial role of individual attitude towards risk in this relationship. While the existence of a relationship between risk aversion and climate risk perception seems highly plausible, evidence on the interaction between these factors in explaining sustainable practices is scarce. By introducing these effects in explaining sustainable practices, it is possible to show how the perception of climate risk affects the engagement in sustainable practices as a viable risk mitigation strategy differently for risk averse and risk seeking individuals. To study this, we employed a unique, comprehensive panel dataset on agricultural practices, socio-economic conditions, and individual characteristics of more than 2800 cocoa producers in Southern Bahia, Brazil, collected between 2015 and 2019, and supplemented our empirical work with qualitative methodologies such as in-depth, semi-structured interviews and observational data. We found that sustainable practices represent a viable climatic risk mitigation strategy, and therefore are implemented particularly by risk averse individuals. However, when climate risk is perceived as high, producers are less likely to engage in sustainable practices, because the highly perceived risk reduces the ability to react and cope with it. In this perceived high-risk context, risk-seeking individuals can better cope with the related anxiety and are more likely to implement sustainable practices. These results shed light on the importance of individual characteristics, often ignored in the literature of vulnerability to climate risk and adaptation, in explaining how producers respond to climate risk and mitigate it through sustainable practices. Moreover, they open up the space to targeted interventions, able to foster the adoption of more sustainable practices and the resilience of vulnerable populations, breaking the vicious cycles that make the poorest even poorer.