Factors explaining the adoption of risk management instruments in irrigated agriculture

Agriculture is an economic activity subject to different sources of risk, mainly related to climatic and market conditions. To manage agricultural risks, farmers can implement a wide range of instruments, such as crop diversification, the use of sales contracts, or agricultural insurance, among others. The main objective of this paper is to analyze, from a comprehensive perspective, the main factors explaining the adoption of a set of eleven risk management instruments considering a sample of irrigated farmers in a Mediterranean agricultural system using logistic regression models. As a complementary objective, this study also analyzes the complementarity and substitution relationships between instruments. The results obtained confirm that most of the variables considered (risk perception, risk aversion, past experience, farmers' sociodemographic characteristics, and technical-economic factors of farms) explain, to a greater or lesser extent, the adoption of one or several risk management instruments. These results contribute to support political decision-making regarding risk management in agriculture in the current context where the negative impacts of climate change are increasing.