Simultaneous adoption of catastrophic risk management tools in aquaculture: A study of floodplain areas of Bangladesh

Abstract

Aquaculture is considered a high-risk industry, with production variability significantly hindering the development and implementation of effective risk management strategies. Globally, farms commonly employ multiple risk management approaches simultaneously. However, previous research has largely overlooked the relationship between the decision to adopt risk management techniques and the feasibility of implementing these technologies concurrently. This study uses bivariate and multinomial probit models to analyze the effects of 300 aquaculture producers' decisions to utilize farm management and vertical integration to mitigate farm risks. The research highlights the potential interconnections between different risk management adoption decisions. The results indicate that decisions regarding vertical integration and farm management implementation are related, suggesting that farmers should focus on a variety of risk management techniques to minimize risks. Additionally, the findings underscore the importance of factors such as age, household income, education, extension contact, land ownership status, disease and flood risks, and farmers' risk aversion in influencing the adoption of farm management and vertical integration for risk reduction. The application of probit approaches to standard risk-management tools provides deeper insights, aiding policymakers in developing more effective risk management strategies.