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This paper reports findings from a study of 178 farm households from two contrasting areas in the Eastern Highlands of Ethiopia. It examines risk perceptions of smallholder farmers under varying contexts. The study utilized both qualitative and quantitative methods of data collection and analysis. It was hypothesized that human capital and household characteristics and orientation, access to resources, infrastructure, information and environmental factors influence perceptions of risks in different ways. Data reduction for independent variables was done by factor analysis (principal component extraction method). Factor analyses identified factors influencing smallholder farmers' perceptions of sources of risks. Logistic regression analyses were used to study the relationships of identified principal components to perceived frequencies of occurrences and consequences of various sources of risks. Logistic regression analyses revealed that asset endowments, locational settings and livelihood diversification strategies pursued determine smallholders' perceived risks. Key findings from the informal survey point out differentiation in perceptions of causes and sources of risks by different actors.
Legesse et al. (2005) studied this question.