Sustainablelivelihoods, diversification and dynamics

The concept 'livelihoods' refers to the resources -tangible and in-tangible - and strategies that individuals and households use to meet their needs (produce food, income, etc.) and accomplish their goals. Livelihoods involve households making choices, taking into account the natural and institutional environments, to combine resources in different production and exchange activities, generate income, meet various needs and goals, and adjust resource endowments to sustain the process. Chambers and Conway (1991:6) provided the most widely used definition:

A livelihood comprises people, their capabilities and their means of living,

including food, income and assets.

Tangible assets are resources and stores, and intangible assets are claims and access. A livelihood is environmen-tally sustainable when it maintains or enhances the local and global assets in which livelihoods depend, and has net beneficial effects on other livelihoods.

A livelihood is socially sustainable which can cope with and recover from stress and shocks, and provide for future generations.

Access and rights to assets (resources), particularly natural capital (land for agriculture and grazing, forests, water, etc.) and the conditions and security of access to these assets fundamentally affect the livelihoods of the world's poorest households. Other key resources are human capital (health, education, training, skills, labor power); physical capital ( t e c h n o l o g y , i n f r a s t r u c t u r e , m o v e a b l e property); social capital (relations of cohesion, trust, and reciprocity; networks; organizations;

leadership; linkages among organizations and communities); financial capital (savings, credit, etc.); political capital (connections to agents of institutions of governance in the political and administrative systems); and, cultural capital (worldview, values, norms, identity).

The stock of productive assets that households and individuals control largely determines their ability to escape from poverty or to avoid it despite adverse shocks. In a larger sense it determines their structural position in society.

Productive assets are the durable inputs used to grow crops and generate income. They also serve as collateral for credit. Endowments of assets such as labor, land and livestock influence households' ability and willingness to risk

investing in emerging opportunities. The socioeconomic mobility or immobility of households and individuals over time reflect their initial asset positions, the incomes and security that their assets generate, variation in households' experience of shocks, and their propensity to take up promising new technologi-cal and market opportunities (Barrett et al., 2006).

Just as small scale farming households strive to operate integrated farming systems with diverse crops and livestock that meet an array of needs (food security, nutrition, income), diversification of income earning activities is important for many households in rural Africa. Their livelihood portfolios are diverse and evolving, and can be considered as systems that generally involve an integrated set of economic activities as they adapt to changing domestic and external circumstances, adding or dropping some activities while continuing others. These may include small-scale rural non-farm enterprises, non-farm employment, and migration (commut-ing, temporary, seasonal). Diversification of livelihood activities can reduce risks and vulnerability, and overcome the 'consumption-smoothing' problem created by the seasonality of output in rain-fed agriculture. It can also be part of a strategy to accumulate assets.

Virtuous spirals of accumulation typically involve diverse livestock ownership, engagement in nfarm self-employment, and diversity of on-farm and non-on-farm income sources (Ellis and Freeman, 2004). Better off households tend to diversify in non-farm business activities (trade, transport, shop keeping, brickmaking) or salaried employment. With the introduction of improved technologies or new crops, political and economic reforms, new opportunities are

accessible and attractive only to relatively better-off households. Those with relatively large initial holdings of land, livestock and adult male labor power often systematically enjoyed better yields and terms of trade and accumulated wealth and remained secure in their livelihoods (Barrett et al., 2006). The poor tend to diversify in casual wage work while remaining heavily reliant on subsistence crop production (OECD 2006). While wealthier households are able to smoothen consumption, poorer households often do not use the few assets they possess to stabilize consumption, instead holding on to their limited assets, even if it entails reduced food intake (Barrett et al., 2006).

Economic diversification levels are higher and more complex than official statistics indicate.

According to Ellis and Freeman (2004), the contribution of non-farm sources to rural household income was roughly 60% in South Asia, 50% in sub-Saharan Africa, and 40% in Latin America (OECD, 2006). The significance of diversification may be multidimensional, both in the short and long term. More diversified household livelihoods may provide more capital to invest in new agricultural technologies and resource improvements and be better able to withstand shocks and risks (IAASTD, 2009a).

Conversely, small farms that diversify may prioritize non-farm activities which provide more regular income, thereby giving lower priority to farming and may not take up promising new technology options that compete for their available labor time. More broadly, institutional settings shape property rights and access to infrastructure and social support services.

Recent attention to technologies and markets for rural poverty reduction has increased analysis of geographic and socio-political factors that

condition uptake of improved technologies and market access (Barrett et al., 2006).

Control of resources determines household resilience when food production and incomes fluctuate in response to changing economic conditions or natural disasters. Options in livelihood strategies are affected by economic, social and cultural considerations (e.g., what is considered appropriate according to gender, age, status). The range of livelihood 'choices' is generally more restricted among the asset poor.

Moreover, some livelihood strategies may compete for the same resources (Hanson, 2005).

Tradeoffs among different components of the resource endowment illustrate why simple or short-term definitions of poverty, hunger and food security provide an incomplete understand-ing of household's livelihood strategies. This has i m p o r t a n t i m p l i c a t i o n s f o r e c o n o m i c sustainability, environmental sustainability and social equity (IAASTD, 2009b).

Sustainable livelihoods approaches (SLAs) to rural development represent an evolution in development thinking but also a significant breakthrough by focusing on lives rather than project resources and outputs. SLAs embody principles that have emerged through critical reflection on decades of successful - and unsuccessful - rural development experience.

Key principles are: being people-centered (primarily households and communities);

starting with a focus on strengths rather than problems and needs; taking a long-term perspective (retrospective and prospective);

operating in a participatory, socially inclusive, and dynamic (flexible and responsive) manner;

utilizing a holistic (multidimensional and multi-level) perspective; and explicitly committing to long-term sustainability. The unique

contribu-tions of SLAs involve understanding the portfolio of livelihood activities (producing food and earning income), improving access to critical resources, strengthening capabilities and social protection to effectively utilize resources, building a diversified set of assets, reducing vulnerability to risks (shocks and stresses), and increasing resilience (Ellis and Freeman, 2004, 2005).

The variety of livelihood activities and strategies -within agriculture and involving other sectors of the economy – affect the quantity and composi-tion of resource endowments over time.

Livelihoods depend not only on current incomes but on how individuals, households, and nations use resources over the long term. Physical and financial capital are critical and their stocks and flows can be measured relatively easily. Equally important but less easily measured are sustainable use of natural capital and investment in human and social capital. Yet the quality and quantity of the household's resources depend, at least in part, on the consumption and investments made previously. For example, a household makes decisions about how much of its income to spend on food, health care or education (each of which affects the quality of its labor resources), how much to spend on seeds, fertilizer and other agricultural inputs, and how much to save or invest in other ways. “Once we recognize the dynamic interaction between household resources, choices, and outcomes, it becomes clear that a more complete understanding of hunger and poverty requires not only a broader understanding of the factors that affect them, but also a longer-term perspective on how they interact over time”

(IAASTD, 2009b:27). This means that social and spatial factors have also to be taken into account

to define poverty, which increases the complexity of its quantitative measure.

Different resource endowments and different goals imply different incentives, choices, and livelihood strategies. For example, two households that have the same endowments of land, labor, and materials may choose different cropping strategies if one household does not have access to savings, credit or insurance and the other one does. In this case, the first household may choose to plant a safe but low yielding crop variety while the second household will plant a riskier variety - expecting higher yields while at the same time knowing that additional financial capital could help sustain income (and consumption levels) even if it were to suffer a poor harvest. Likewise, different livelihood strategies and different weather and market conditions imply different outcomes, which in turn imply different endowments. In the example just mentioned, the first household may suffer smaller losses in a drought year, but also [experience] smaller gains in average and good years. Even when both households suffer losses, their coping strategies might differ. The first, in order to meet consumption needs, might be forced to sell assets. If many other households are in a similar position, asset prices might fall, making it even more difficult to exchange them for sufficient food. Households with sufficient food or financial reserves, by contrast, may be in a position to buy assets at discounted prices, increasing not only their own ability to survive future droughts but also the degree of inequality in the region (IAASTD, 2009b:29-30).

Sustainability can be understood in terms of maintaining or increasing a household's ability to produce desired goods and services - which may or may not involve maintaining or increasing the

level of each particular component of the household's resource endowment.

Vulnerability and resilience are key SLA concepts.

The concept of vulnerability captures the likelihood that people will fall into poverty because of economic shocks or personal mishaps. Small scale farmers are very aware of their vulnerabilities to multiple risks – including direct drivers (diseases, pests, climate, natural disasters) and indirect drivers (markets, infrastructure and external inputs). Therefore, they adopt diverse risk-minimizing and mitigating strategies (IAASTD, 2009b).

Vulnerability to these risks is a result of poverty and socioeconomic position, influenced by social dimensions such as income levels, asset ownership, ethnicity, age, class, and gender (World Bank, 2009a). Resilience refers to the capacity of an individual, household or community to cope with a stress or shock, overcome adversity or adapt positively to change. The ability to 'bounce back' from negative experiences (drought, flood, illness, injury, or death), rather than lose income and assets, may reflect the innate qualities of individuals or be the result of experience and learning. Resilience can be developed and enhanced to promote greater wellbeing. It is a complex construct with many interrelated factors: experience, learning, sense of purpose, positive outlook, social networks and support, infrastructure, and support services (Hegney et al., 2008).

Because commonly used poverty measures are generally static, they tend to miss this dynamic aspect of poverty. Unlike poverty, which is assessed after the fact, vulnerability “focuses on assessing the extent of the threat of poverty or low well-being, measuredex ante, before the veil

of uncertainty has been lifted” (Dercon, 2005).

Vulnerable households deal with shocks by selling assets, which are very difficult to rebuild, by reducing food consumption in terms of quantity and variety, and reducing or eliminating health and education expenditures. These ex post coping mechanisms have long-term negative effects on quality of life and long term viability of livelihoods (FAO, 2011). Practical Action has developed the framework 'From Vulnerability to Resilience' for analysis and action to reduce vulnerability and strengthen the resilience of individuals, households and communities. It sets out the key factors that contribute to peoples' vulnerability, explains the links between these factors, and includes ideas for action to strengthen resilience (Pasteur, 2011).

For many, the core component of SLA frameworks concerns access to and control over assets. However, the real value of SLA frameworks concerns much more than assets.

SLAs reflect an integrated conceptualization of 'structure' and 'agency' that is essential in addressing poverty. They involve identification and multi-sectoral analysis of contextual factors, conditions and trends (demographics, environment, markets, policies), institutions and organizations that influence access to and use of livelihood resources, the portfolio of livelihood activities (food production and income earning), and outcomes in terms of well-being and sustainability (Hussein, 2002).

SLAs are being applied and adapted to a range of different development challenges – particularly community-driven development, making markets work for the poor, food security, disaster-risk reduction, and climate change adaptation. “The language has changed so much

in the last 15 years – from thinking about an 'adequate' and 'decent' standard of living to 'livelihoods strengthening,' 'livelihoods diversification' and beyond that linking to discourses on climate change, resilience, and power – these all present big steps forward”

(Turrall, 2011:1). Earlier criticisms are resulting in changes in practitioners' methods and areas of work to increase accountability to local populations, not just donors. These include:

greater emphasis on understanding cultural and social contexts and on organizational learning to improve outcomes; commitment to changing power relations related to control over assets between men and women, commercial and political actors, and community organizations and local governance structures; and willingness to engage in policy making processes in ways that link micro and macro arenas.