Natural Hazards

, Volume 82, Issue 3, pp 1931–1945 | Cite as

Farmers versus nature: managing disaster risks at farm level

  • Raza UllahEmail author
  • Ganesh P. Shivakoti
  • Asif Kamran
  • Farhad Zulfiqar
Original Paper


Farmers have number of options available in managing disaster risks at farm and many of them utilize these risk management tools simultaneously. However, previous studies have ignored the correlation among the risk management adoption decisions. This study, therefore, aimed at investigating factors affecting the adoption of off-farm diversification and agricultural credit to manage catastrophic risks while taking into account the contemporaneous correlation in the decisions to adopt the two risk management tools simultaneously. Bivariate and multinomial probit approaches are applied to data collected from four districts of Khyber Pakhtunkhwa Province in Pakistan. Findings revealed a strong correlation between the decisions to adopt the two risk management tools and conclude that adopting one risk management tool may induce farmers to adopt the other tool at the same time. Moreover, socioeconomic characteristics, losses due to natural disasters, farmers’ risk perceptions and their risk attitude play significant role in shaping their decisions of adopting risk management tools.


Disaster risk Risk management Simultaneous adoption Bivariate probit Multinomial probit 


  1. Abedullah MN, Khalid M, Kouser S (2009) Role of agriculture credit in the growth of livestock sector: a case study of Faisalabad, Pakistan. Vet J 29(2):81–84Google Scholar
  2. Ahmad S, Jamal M, Ikramullah A, Himayatullah (2007) Role of extension services on the farm productivity of district Swat: a case study of two villages. Sarhad J Agric 23(4):1265–1272Google Scholar
  3. Anderson JR (2001) Risk management in rural development: a review. Rural Development Strategy Background Paper 7, Rural Development Department, the World Bank, Washington, DCGoogle Scholar
  4. Antón J (2009) Risk management in agriculture—a holistic conceptual framework. Organization for Economic Co-operation and Development. Trade and Agriculture Directorate Committee for Agriculture. TAD/CA/APM/WP(2008)22/FINALGoogle Scholar
  5. Arrow KJ (1964) The role of securities in the optimal allocation of risk bearing. Rev Econ Stud 31:91–96CrossRefGoogle Scholar
  6. Ashfaq M, Hassan S, Naseer MZ, Baig IA, Asma J (2008) Factors affecting farm diversification in rice–wheat. Pak J Agric Sci 45(3):91–94Google Scholar
  7. Binici T, Koc AA, Zulauf CR, Bayaner A (2003) Risk attitude of farmers in terms of risk aversion: a case study of lower Seyhan plain farmers in Adana-province, Turkey. Turk J Agric For 27:305–312Google Scholar
  8. Coble KH, Heifner RG, Zuniga M (2000) Implications of crop yield and revenue insurance for producer hedging. J Agric Resour Econ 25:432–452Google Scholar
  9. Cohen A, Einav L (2007) Estimating risk preferences from deductible choice. Am Econ Rev 97(3):745–788CrossRefGoogle Scholar
  10. Cooper DF, Grey S, Raymond G, Walker P (2005) Project risk management guidelines. Wiley, ChichesterGoogle Scholar
  11. Davis TD, Patrick GF, Coble KH, Knight TO, Baquet AE (2005) Forward pricing behavior of corn and soybean production. J Agric Appl Econ 37:145–160Google Scholar
  12. Deressa TT, Ringler C, Hassan RM (2010) Factors affecting the choices of coping strategies for climate extremes. The case of farmers in the Nile Basin of Ethiopia IFPRI Discussion Paper 01032Google Scholar
  13. Goodwin BK, Schroeder TC (1994) Human capital, producer education programs, and the adoption of forward-pricing methods. Am J Agric Econ 76:936–947CrossRefGoogle Scholar
  14. Government of Pakistan (GoP) (2012) Economics survey of Pakistan (2010–11), Economics Advisory Wing. Finance Division, IslamabadGoogle Scholar
  15. Harrison G, Lau M, Rutström E (2007) Estimating risk attitudes in Denmark: a field experiment. Scand J Econ 109(2):341–368CrossRefGoogle Scholar
  16. Hellmuth ME, Mason SJ, Vaughan C, van Aalst MK, Choularton R (eds) (2011) A better climate for disaster risk management. International Research Institute for Climate and Society (IRI), Columbia University, New YorkGoogle Scholar
  17. Kammar SK, Bhagat R (2009) Constraints experienced by farmers in adopting risk and uncertainty management strategies in rainfed agriculture. Pusa AgriSci 32(2009):70–74Google Scholar
  18. Ke B, Wang HH (2002) An assessment of risk management strategies for grain growers in the Pacific Northwest. Agric Fin Rev 62(2):117–133CrossRefGoogle Scholar
  19. Khan MA (2012) Agricultural development in Khyber Pakhtun Khwa: prospects, challenges and policy options. Pak A J Pak Stud 4(1):49–68Google Scholar
  20. Kouame EBH (2010) Risk, risk aversion and choice of risk management Strategies by cocoa farmers in western Cote D’ivoire. University of Cocody-AERC Collaborative PHD Program. Retrieved 28th September, 2012
  21. Makki SS, Somwaru A (2001) asymmetric information in the market for yield and revenue insurance products. Washington, DC: USDA Economic Research Service, Technical Bulletin No. 1892, April 2001Google Scholar
  22. Makus LD, Lin BH, Carlson J, Kreibill-Prather R (1990) Factors influencing farm- level use of futures and options in commodity marketing. Agribus Int J 6:621–631CrossRefGoogle Scholar
  23. Mesfin W, Fufa B, Haji J (2011) Pattern, trend and determinants of crop diversification: empirical evidence from smallholders in eastern Ethiopia. J Econ Sust Dev 2(8):78–89Google Scholar
  24. Olarinde LO, Manyong VM, Akintola JO (2007) Attitudes towards risk among maize farmers in the dry savanna zone of Nigeria: some prospective policies for improving food production. Afr J Agric Res 2(8):399–408Google Scholar
  25. Pratt J (1964) Risk Aversion in the small and in the large. Econometrica 32(1):122–136CrossRefGoogle Scholar
  26. Rehima M, Belay K, Dawit A, Rashid S (2013) Factors affecting farmers’ crops diversification: evidence from SNNPR, Ethiopia. Int J Agric Sci 3(6):558–565Google Scholar
  27. RISE (2010) Road to innovative social entrepreneurship (Pakistan). 2010 floods in Pakistan. The aftermath, the lives affected. Retrieved 23rd August, 2012
  28. Robinson LJ, Barry PJ (1987) the competitive firm’s response to risk. MacMillan Publishing Company, New YorkGoogle Scholar
  29. Shahbaz B, Ali T, Khan IA, Ahmad M (2010) An analysis of the problems faced by farmers in the mountains of northwest Pakistan: challenges for agricultural extension. Pak J Agric Sci 47(4):417–420Google Scholar
  30. Shapiro BI, Brorsen BW (1988) Factors affecting farmers’ hedging decisions. North Cent J Agric Econ 10:145–153CrossRefGoogle Scholar
  31. Sherrick BJ, Barry PJ, Ellinger PN, Schnitkey GD (2004) Factors influencing farmers’ crop insurance decisions. Am J Agric Econ 86(1):103–114CrossRefGoogle Scholar
  32. Skees JR (1999) Agricultural risk management or income enhancement? Regul CATO Rev Bus Gov 22(1):35–43Google Scholar
  33. Tanaka T, Camerer CF, Nguyen Q (2010) Risk and time preferences: linking experimental and household survey data from Vietnam. Am Econ Rev 100(1):557–571CrossRefGoogle Scholar
  34. Tangermann S (2011) Risk management in agriculture and the future of the EU’s Common Agricultural Policy; ICTSD Programme on Agricultural Trade and Sustainable Development; Issue Paper No. 34; ICTSD International Centre for Trade and Sustainable Development, Geneva, SwitzerlandGoogle Scholar
  35. Tavernier EM, Onyango BM (2008) Utilization of farm management risk strategies at rural/urban fringe. Afr J Agric Res 3(8):554–565Google Scholar
  36. Torkamani J, Rahimi MH (2001) Evaluation of farmer’s risk attitudes using alternative utility functional forms. J Agric Sci Technol 3(2001):243–248Google Scholar
  37. Ullah R, Shivakoti GP (2014) Adoption of on-farm and off-farm diversification to manage agricultural risks: are these decisions correlated? Outlook Agric 43(4):265–271. doi: 10.5367/oa.2014.0188 CrossRefGoogle Scholar
  38. Ullah R, Jourdain D, Shivakoti GP, Dhakal S (2015a) Managing catastrophic risks in agriculture: simultaneous adoption of diversification and precautionary savings. Int J Disaster Risk Reduct 12(2015):268–277. doi: 10.1016/j.ijdrr.2015.02.001 CrossRefGoogle Scholar
  39. Ullah R, Shivakoti GP, Ali G (2015b) Factors effecting farmers’ risk attitude and risk perceptions: the case of Khyber Pakhtunkhwa, Pakistan. Int J Disaster Risk Reduct 13(2015):151–157. doi: 10.1016/j.ijdrr.2015.05.005 CrossRefGoogle Scholar
  40. United Nations (2014) Agriculture and disaster risk. Retrieved 9th February 2015
  41. Velandia M, Rejesus RM, Knight TO, Sherrick J (2009) Factors affecting farmers’ utilization of agricultural risk management tools: the case of crop insurance, forward contracting and spreading sales. J Agric Appl Econ 41(1):107–123Google Scholar
  42. WFP (2010) World Food Programme. September. Pakistan Flood Impact Assessment. Retrieved 28th July, 2012
  43. Yamane T (1967) Statistics, an introductory analysis, 2nd edn. Harper and Row, New YorkGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Raza Ullah
    • 1
    Email author
  • Ganesh P. Shivakoti
    • 2
  • Asif Kamran
    • 3
  • Farhad Zulfiqar
    • 4
  1. 1.Department of Agricultural and Applied EconomicsThe University of Agriculture PeshawarPeshawarPakistan
  2. 2.Natural Resources Management, School of Environment, Resources and DevelopmentAsian Institute of TechnologyKhlong LuangThailand
  3. 3.Nuclear Institute for Agriculture and Biology (NIAB)FaisalabadPakistan
  4. 4.Regional and Rural Development Planning (RRDP), School of Environment, Resources and DevelopmentAsian Institute of TechnologyKhlong LuangThailand

Personalised recommendations