REECAP 7th Annual Meeting

Risk, Time and Water: Linking Smallholders’ Preferences to Irrigation Scarcity in Kyrgyzstan

Not scheduled

20m

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig

Applications of experimental methods to agricultural and agri-environmental themes Session Block

Speaker

Marlen Tynaliev (Leibniz Institute of Agricultural Development in Transition Economies (IAMO))

Description

Traditional economic models assume stable preferences, but growing literature suggests that exposure to dramatic shocks affects economic preferences. In regions where irrigation water availability is unpredictable, farmers frequently adjust their risk-taking and intertemporal choices. Despite extensive research on climate shocks, the effects of recurring irrigation shortages and drought events on farmers’ risk and time preferences remain understudied, particularly in Central Asia, where agriculture is dependent on irrigation water.
Our study addresses this gap by investigating whether farmers’ risk and time preferences differ with respect to water availability and variability. Specifically, we examine whether farmers prone to irrigation water scarcity and droughts have greater risk aversion, loss aversion, probability weighting, impatience, and present bias compared to those operating under water abundance. Additionally, we extend the study of economic preferences to Central Asia, where agriculture heavily depends on seasonal irrigation, providing implications for agricultural policy, climate adaptation, and rural development.
We conducted lab-in-the-field experiments with 425 smallholders conducted in October 2024 in two village districts of Jalal-Abad province, Kyrgyzstan, using experimental design of Tanaka et al. (2010). One district has no problems with water supply, while another is prone to frequent water shortages. Risk and time preferences were measured using cumulative prospect theory and quasi-hyperbolic discounting. Socio-demographic data were collected via a post-experimental survey.
The results reveal that farmers experiencing frequent annual irrigation water shortages tend to have higher risk aversion and loss aversion. However, those who faced irrigation water shortages in the past five years and those who encountered more severe water scarcity and drought in the past three years have both lower risk and loss aversion. Experience of frequent annual irrigation water shortages is nor related with time preference parameters. However, farmers who faced irrigation water shortages in the past five years show a higher discount rate (more time-inconsistent) and present bias (more impatient). Similarly, farmers who experienced more severe water scarcity and drought in the past three years have a higher discount rate. In contrast, experience of a higher diversity of extreme weather events in the past five years is associated with a lower discount rate (more patience).
These findings contribute to the broader discussion on relationship between farmers’ preferences and climate-induced resource variability. By demonstrating that farmers exposed to prolonged water scarcity exhibit distinct patterns of risk aversion, loss aversion, and time inconsistency, our study emphasizes the need to integrate behavioral insights into agricultural and climate adaptation policies.