Are Micro-, Small- and Medium-Sized Enterprises Willing to Contribute to Collective Flood Risk Reduction? Scenario-Based Field Experiments from Jakarta and Semarang, Indonesia

In developing countries, micro-, small-, and medium-sized enterprises (MSMEs) often cannot substantially reduce their exposure to floods on their own. As state authorities also have difficulty in providing sufficient flood protection, experts argue that collective adaptation initiated by firms can compensate for these shortcomings. However, private sector engagement in this field remains rare and is mostly dominated by large firms. Our article examines whether MSMEs are willing to contribute to flood risk reduction measures. Based on scenario-based field experiments, 120 participating enterprises in Jakarta and Semarang are willing to contribute to collective adaptation in 43% of all the scenarios we ran. Even though MSMEs often operate under difficult conditions, they are surprisingly often willing to contribute if the costs are distributed fairly. The analysis underlines the importance of social motives in explaining the collective engagement of MSMEs and, thus, provides relevant results for future adaptation policies.