Credit Accessibility, Risk Attitude, and Social Learning: Investment Decisions of Aquaculture in Rural Indonesia

This study examines the factors that influenced poor Indonesian farmers to invest in floating net aquaculture after being relocated due to a reservoir construction project. To compare three primary decision factors, credit accessibility, risk attitudes, and social learning, (i.e., learning effects from others' experience), we analyze 16 years of socio-economic retrospective data collected in the field interviews exclusively for this study. Our analysis reveals that credit accessibility and risk attitudes are the most important factors that influence the rate of aquaculture investment. Social learning as well as household education also influences the investment decision significantly. Our results suggest that developmen t projects that involve voluntary investments by a poor populace will be more successful if complementary services to promote credit and insurance accessibility and/or local information sharing are made available, either by the government or the private sector. Also, such support should not cease at the launch of the project but rather continue and in fact evolve to address the changing factors at the different stages of the project.