Risk Attitudes and Adaptation: Experimental Evidence from a Flood-Prone Urban Informal Settlement in South Africa with Martine Visser & Kerri Brick
Professor Visser will present joint work with Kerri Brick entitled, “Risk Attitudes and Adaptation: Experimental Evidence from a Flood-Prone Urban Informal Settlement in South Africa” (abstract below).
This study characterises the risk attitudes of a sample of individuals living in a flood-prone, urban informal settlement. A number of Cape Town’s informal settlements are vulnerable to flooding. Vulnerability to flood risk is determined, in part, by participants’ adaptation strategies. The objective of this paper is to determine the extent to which risk attitudes are correlated with choice of adaptation strategy. Risk attitudes are elicited from participants’ choices over a series of lottery tasks for real monetary prizes. The results indicate that individuals adopting more effective (and costly) adaptation strategies are more risk averse. This result implies that attempts by local authorities to encourage uptake of adaptation strategies must take into account risk attitudes. For example, city officials might supplement ongoing education initiatives with proactive measures to incentivize even risk-seeking individuals to engage with adaptation (for example, through the provision of a subsidy on building materials).