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Understanding producers' motives for adopting sustainable practices: the role of expected rewards, risk perception and risk tolerance

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  • Andres Trujillo-Barrera
  • Joost M. E. Pennings
  • Dianne Hofenk

Abstract

Understanding the motives and risk attitudes of producers to engage in sustainable practices is important for policy-makers who wish to increase the likelihood of adoption and improve the design of incentives. This article examines the underlying motives of producers to adopt sustainable practices. We focus on expected economic, social and personal rewards and analyse the role of producers' financial risk perception and risk tolerance. Results from personal interviews with 164 hog producers show that the adoption of sustainable practices is affected by expected economic rewards but not by social and personal rewards. Further, while perceived risk is a barrier to the adoption of sustainable practices, risk tolerance is a positive moderator of the relationship between economic rewards and adoption. In addition, perceived tax benefits and turnover have a significant positive relationship with adoption, while education and age do not play a role.

Suggested Citation

  • Andres Trujillo-Barrera & Joost M. E. Pennings & Dianne Hofenk, 2016. "Understanding producers' motives for adopting sustainable practices: the role of expected rewards, risk perception and risk tolerance," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(3), pages 359-382.
    • Handle: RePEc:oup:erevae:v:43:y:2016:i:3:p:359-382.
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    File URL: http://hdl.handle.net/10.1093/erae/jbv038
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    1. Rosseel, Yves, 2012. "lavaan: An R Package for Structural Equation Modeling," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 48(i02).
    2. Hoffmann, Arvid O.I. & Post, Thomas & Pennings, Joost M.E., 2013. "Individual investor perceptions and behavior during the financial crisis," Journal of Banking & Finance, Elsevier, vol. 37(1), pages 60-74.
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