Attitudes towards risk are measured for households in Northern Zambia using an experimental gambling approach with real payoffs that at maximum were equal to 30% of average total annual income per capita. The results of the experiment show decreasing absolute risk aversion and increasing partial risk aversion. Determinants of risk aversion are investigated using random effects interval regression model exploiting the panel data structure of the repeated experiments. Wealth indicator variables are found to be significant, and partial relative risk aversion decreases as wealth increases. Females are found to be more risk averse than males.

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We use a choice experiment to evaluate a hypothetical irrigation water pricing regime in Karnataka State, India. The proposed regime includes increasing the availability of water in the dry season, increasing irrigation frequency, water sharing with downstream water users, set against the introduction of a semi-volumetric irrigation price. The majority of farmers chose the status quo (SQ) option. Given the large heterogeneity in farmers’ SQ water availability, irrigation practices and current water tax payments, the SQ could not be given a unique baseline interpretation. This poses a potential problem for choice model estimation. By coding the individual SQ situation of farmers, we observed considerable increase in the explanatory power of the choice experiment models. The results may be of general interest for choice experiments of environmental goods and services with heterogeneous spatial distribution, heterogeneous respondents and/or contentious policies that are expected to elicit considerable SQ response.

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