Risk and uncertainty in agricultural development; notes on an ADC seminar

The conference examined how risk and uncertainty about the outcome of production and investment decisions by individuals affect the development process of developing countries. The basic concern was how risk and uncertainty affect the efficiency of production and investment decisions by individuals, firms, and governments, how risk and uncertainty affect the distribution of income and wealth among households, and how risk and uncertainty affect policy prescriptions and the effectiveness of policy tools. The conference was unable to reach conclusions on the role of risk and uncertainty in many development problems because there is a scarcity of empirical evidence on probability distributions; evidence on attitudes towards risk of development actors is still scarce, and there are few risk-specific policy alternatives to deal with possible adverse consequences of risk aversion. For decision theory to be more useful, it will be necessary to improve the empirical knowledge in the area and to simplify and standardize the methodological tools.