Abstract/Summary

Xinjiang grape farmers’ livelihoods have been severely affected by an upward trend in precipitation. The local government is providing some policy supports to encourage them to spontaneously adapt to the climate variability. Although the proven effectiveness of the new technology and financial supports from local government, few farmers are adopting rain covers to responding the regionally increasing trend of the rainfall. This thesis explores the possible reasons for the lower adoption rates from the perspective of farmers’ time discounting of future benefits and their preference of future risks. This study designs three novel choice experiments to obtain farmers’ attitudes towards time and risks. Using hierarchical Bayesian approaches and classical econometric methods, this research mainly finds that (1) Xinjiang grape growers discount the future very heavily, with a discount rate of 0.17 per year, which is almost four times higher than the Chinese market interest rate. This high discount rates implies that farmers pay less attention towards events far off in the future. Meanwhile, farmers’ adoption decisions largely depend on their past actual losses rather than anticipated future losses. (2) Targeting farmers show highly risk aversion in the gain domain and highly risk-seeking in the loss domain. Respondents with greater risk aversion and loss aversion have a relatively higher likelihood to adopt rain covers. (3) Human subjective evaluations towards past experience may be different from the actual experience that they have had. People’s personal characteristics may help to explain the memory or self-report bias. This study finds that people who are more aversion to risks and losses tend to believe they have suffered more serious outcomes. This research also found that more optimistic respondents largely believe they have experienced fewer economic losses in the past. (4) The findings also concludes that Chinese grape farmers’ risk preferences arguably better follow prospect theory compared to expected utility theory. This research also supports the contention that people may have special responses to prospects with a payoff boundary at zero. This thesis analyses the rainfall pattern in Xinjiang and explores the possible psychological factors that may hinder local grape farmers’ adaptation intention and behavior. In addition, this thesis also studies other scientific problems related to prospect theory and expected utility theory. In conclusion, this thesis hopes to provide theoretical and practical implications for individual adaptation to climate change and the application of choice theory under risk and uncertainty.