Quantifying rural livelihood strategies in developing countries using an activity choice approach

This article uses a quantitative activity choice approach, based on identification of activity variables and application of latent class cluster analysis, to identify five major rural livelihood strategies pursued by households (n= 576) in Bolivia, Nepal, and Mozambique. Income sources and welfare outcomes are compared across strategies and household differences in asset holdings are analyzed using multinomial logit regression. Findings reveal that income diversification is the norm, that a higher degree of specialization does not characterize more remunerative livelihood strategies, that nonfarm income significantly contributes to higher income earnings, that environmental reliance does not vary across strategies, and that small‐scale farmers are the largest and poorest livelihood group. Some livelihood strategies are superior to all other strategies in terms of income earned; access to more remunerative livelihood strategies is determined by land ownership, education, and ethnic affiliation. Finally, the article also highlights that additional work is required to determine the most suitable methods for livelihood strategy identification.     

Food Standards and Welfare: General Equilibrium Effects

We analyse the general equilibrium effects of the growth of high standard food chains on household welfare. To measure structural production changes and welfare effects on rural and urban households, our model has two types of agents, five kinds of products and four types of factors. We calibrate the model using a Chinese dataset. The simulation results show that the effects on poor rural households depend on a variety of factors, including the nature of the shocks leading to the expansion of high standard sector, production technologies, trade effects, spillover effects on low standard markets, factor market constraints and labour market effects.     

The role of access to finance in disaster recovery: Evidence from coastal communities in India

Natural disasters affect economic activities and welfare of small-scale producers in developing countries, but may also offer opportunities to reinvest in productive asset, economic capital, and new technologies for future economic prospects. This paper investigates the impacts of a livelihood recovery project that provided access to finance and rehabilitated communal infrastructures in the coastal communities of Tamil Nadu, India which were severely affected by the 2004 tsunami. We replicate the project's eligibility criteria to build the counterfactual to identify control households based on the validation of secondary data and administrative records. Using data from a carefully designed primary survey, we estimate the impacts of providing access to finance and rehabilitating communal infrastructures on economic and livelihood outcomes. Results indicate positive and significant impacts on income, asset and food security. These impacts are mainly driven by improved access to finance provided and participation in groups. Findings highlight the importance of ensuring access to finance for sustainable economic recovery among small-scale producers, particularly in the aftermath of natural disasters.     

农地整治区农户生计脆弱性指数评估研究*——基于湖北荆门和宜昌的实证研究

[目的]农地整治能通过多种有效途径改善农户的生计资本。以农地整治的角度切入来研究农户生计脆弱性的变化规律,探究农地整治对农户生计脆弱性的影响,为探索改善农户生计的可持续性提供理论借鉴。[方法]以农地整治对生计资本的直接改善为出发点,基于可持续生计分析框架,根据IPCC关于脆弱性的解释,建立农地整治区农户生计脆弱性评估框架体系,其主要涵盖农户面临的自然风险、生计资本以及适应策略3方面,通过熵权法确定指标权重。基于湖北省荆门、宜昌两地区的394户农户调查问卷,运用生计脆弱性评估框架计算得到农地整治前后农户生计脆弱性指数,同时,针对荆门、宜昌两地区分别进行评估研究。[结果](1)农地整治前后农户生计脆弱性指数分别为-0.223和-0.423,在整治之后农户生计脆弱性显著降低。(2)生计脆弱性指数变化的影响因素存在地区性差异。荆门地区整治前后的生计脆弱性指数变化依次受旱地情况、耕地灌溉情况、村庄绿化设施、农田水利设施的变化量等因素的影响;宜昌地区整治前后生计脆弱性指数变化依次受农田水利设施、村庄道路通达、村庄绿化设施、田间道路、耕地灌溉情况、水田情况、旱地情况的变化量等因素的影响。[结论]为提高农户福利水平,降低其生计脆弱性,建议农地整治的规划与实施要进一步关注农户生计问题,特别重视相关自然资本和物质资本的改善,同时不同实施地区要从贡献因素排序出发,实现提高农户生计脆弱性改善的目的。     

Access to markets,weather risk,and livestock production decisions: Evidence from Ethiopia

Despite several studies showing the effect of access to markets and weather conditions on crop production, we know quite little on whether and how livestock production systems respond to variation in weather risk and access to markets. In this paper, we study whether and how livestock production responds to (access to) markets and varying weather risk. We also explore whether such responses vary across livelihood zones and livestock production systems. We study these research questions using households’ livestock production, ownership, and marketing decisions of households in Ethiopia. We find that households living close to markets are more likely to engage in market-oriented livestock production and use modern livestock inputs. We also find that households exposed to more unpredictable weather are less likely to engage in livestock production for markets, rather they are more likely to engage in livestock production for precautionary savings and insurance. Furthermore, greater rainfall uncertainty influences livestock portfolio allocation toward those which can be easily liquidated while also discouraging investment in modern livestock inputs. However, these responses and patterns vary across livelihood zones and production systems; most of these stylized responses and impacts are more pronounced and significant in the arid and semi-arid lands of Ethiopia, where livestock herding remains a dominant source of livelihood. Those households relying only on livestock production seem more sensitive and responsive to weather risk and weather shocks. The heterogeneity in responses and impacts of weather risk among farming systems and livelihoods highlights the need for more tailored livestock sector policies and interventions.     

The leakage and livelihood impacts of PES contracts: A targeting experiment in Malawi

Most evaluations of payments for environmental services programs focus on immediate environmental impacts, and do not measure the effects on socioeconomic outcomes or on other land use activities (leakage). Efficient allocation of land use contracts, through auctions for example, may help mitigate concerns about adverse livelihood or leakage effects. This study reports on a field experiment that varied the allocation of afforestation contracts to smallholder farmers in Malawi. Households were randomly assigned to participate in an auction or in a lottery for the contracts, which provided three years of payment based on tree survival outcomes. Households that did not receive a contract as a result of the lottery form a pure comparison group. The results show evidence for within-farm leakage for households that received a contract at random, in the form of additional land clearing. Randomly contracted households are also more likely to report household labor shortages. These effects are mitigated to some degree when contracts are assigned through an auction. Together, the results point to leakage and livelihood impacts from payments for environmental services that are often overlooked in standard evaluations, but which may be reduced through improvements in contract targeting.     

A latent class approach to investigating demand for genetically modified banana in Uganda

This study explores consumer acceptance and valuation of a genetically modified (GM) staple food crop in a developing country prior to its commercialization. We focus on the hypothetical introduction of a disease‐resistant GM banana variety in Uganda, where bananas are among the most important staple crops. A choice experiment is used to investigate consumer preferences for various attributes related to the banana (such as bunch size, technology, producer benefit, and price) and examine their opinions on GM foodstuff. Choice data come from 421 banana‐consuming households randomly selected from three regions of Uganda. A latent class model is used to investigate the heterogeneity in consumers’ preferences for selected attributes related to the banana and to profile consumers who are more or less likely to accept GM bananas. Our results reveal that there is significant heterogeneity in consumer preferences across our sample. GM bananas are valued the most by poorer households located in the rural areas of the Eastern region. These food‐insecure households would experience the highest benefits (i.e., welfare gains) from the commercial release of GM bananas. In contrast, urban consumers are less accepting of GM bananas, and they would experience significant welfare losses if GM banana is released. According to our welfare estimates, both the total welfare benefits acquired by the gainers and the total welfare losses borne by the losers of this technology are significant and large. These results suggest the need for further investigation of the overall welfare effects of the introduction of GM bananas on the Ugandan society as a whole.     

Adaptive choice of livelihood patterns in rural households in a farm-pastoral zone: A case study in Jungar,Inner Mongolia

From a dynamic process perspective, this study examined households’ adaptive choice of livelihood patterns in the context of changing rural China based on a 12-year continuous household survey in Jungar Banner. By referring to households’ diversified income and vocation, we classified rural livelihood patterns into planting oriented, stockbreeding oriented, half labour and half peasant, non-agriculture oriented, and labour-losing. Results show that different livelihood patterns exhibit distinctive disparities and geographical regularities. Stockbreeding oriented and non-agriculture oriented livelihood patterns are relatively more lucrative. The former was traditionally widely adopted by rural households and the latter has become the most popular in recent years, while the other three patterns are emerging or transitional ones. Then we explored the internal mechanisms of households’ livelihood choices using a multinomial logit model. Results indicate that human capital and physical capital were key factors affecting the differentiation of livelihood patterns, and natural capital was the premise for livelihood pattern transformation. Based on a series of policy interventions, the overall trends in livelihood transitions revealed that the proportion of stockbreeding oriented households and half labour and half peasant households sharply decreased, while the proportion of non-agriculture oriented households and labour-losing households largely increased, and the proportion of planting oriented households increased slightly with their management style transforming from extensive to intensive and specialized. Therefore, government interventions must conform to the transition trends and be tailored to fit different livelihood patterns by adjusting and enforcing each type of capital.     

Are farmers ‘efficient but poor’? The impact of crop choices on technical efficiency and poverty in Nigeria

We test the ‘efficient-but-poor’ hypothesis by estimating the determinants of smallholders' choice over cash or food crops and whether their crop choice affects technical efficiency and poverty using the national household panel data in Nigeria. We employ the stochastic frontier analyses correcting for sample selection about farmers' crop choice. Our results indicate that smallholders are generally efficient in their resource allocations. A treatment effects model is employed to estimate farmers' crop choice in the first stage and the impact of their choices on technical efficiency and poverty outcomes in the second stage. The results show that farmers' access to free inputs, non-farm income and the use of seeds from the previous growing season are important determinants of crop choice. The adoption of cash crops by food-crop producing households will not generally reduce poverty, although it will improve technical efficiency marginally. However, if cash crops are commercialised, poverty tends to decline.     

The role of health,experience, and educational attainment in agricultural production: Evidence from smallholders in Burkina Faso

We apply parametric and nonparametric methods to data from smallholders in Burkina Faso and assess the role that human capital characteristics play in the agricultural production process. Our results point to the technology‐changing nature of health, education, and experience. However, effects are rather heterogeneous. The productivity elasticity of health is much larger for households in the lowest landholding quintiles, while returns to experience are larger for households in the upper quintile. In terms of policy implications, our results suggest that productivity can be stimulated through the allocation of expenditure to social services that enhance certain types of human capital. Interventions aimed at improving the health status of households with smaller landholdings could have particularly strong welfare effects.     

Poverty analysis using small area estimation: an application to conservation agriculture in Uganda

This article demonstrates the utility of small area estimation of poverty (SAEp) methods for researchers wishing to conduct a detailed welfare analysis as part of a larger survey of a small geographic area. This study applies SAEp methods as part of an impact assessment of a conservation agriculture production system in Eastern Uganda. Using SAEp, we estimate Foster–Greer–Thorbecke rural poverty indices, estimate the effects of per‐acre farm profit increases to poor households on the indices, and compare the findings to estimates of net returns from a field‐level evaluation of conservation agriculture for maize farmers. Results suggest that increasing the farm profits of the bottom 30% of households by $1.60 per‐acre per‐season would reduce rural poverty incidence by 1 percentage point. Available data on the net returns to conservation agriculture indicate that even these modest increases are achievable for few adopting households.     

Nontraditional crops,traditional constraints: The long‐term welfare impacts of export crop adoption among Guatemalan smallholders

This article documents the long‐term welfare effects of household nontraditional agricultural export (NTX) adoption. We use a panel dataset that spans the period 1985–2005, and employ difference‐in‐differences estimation to investigate the long‐term impact of nontraditional agricultural export adoption on changes in household consumption status and asset position in the Central Highlands of Guatemala. Given the heterogeneity in adoption patterns, the analysis differentiates the impact estimates based on a classification of households that takes into account the timing and duration of nontraditional agricultural export adoption. The results show that while, on average, welfare levels have improved for all households irrespective of adoption status and duration, the extent of improvement has varied across groups. Long‐term adopters exhibit the smallest increase in the lapse of two decades, in spite of some early gains. Conversely, early adopters who withdrew from nontraditional agricultural export production after reaping the benefits of the boom period of the 1980s are found to have fared better and shown greater improvements in durable asset position and housing conditions than any other category.     

Policies for sustainable development in the hillside areas of Honduras: a quantitative livelihoods approach

In this article, we use data for 376 households, 1,066 parcels, and 2,143 plots located in 95 villages in the hillside areas in Honduras to generate information needed by decision makers to assess the needs and opportunities for public investments, and design policies that stimulate natural resource conservation. We develop a quantitative livelihood approach, using factor and cluster analysis to group households based on the use of their main assets. This resulted in seven household categories that pursue similar livelihood strategies. We use a multinomial logit model to show that livelihood strategies are determined by comparative advantages as reflected by a combination of biophysical and socioeconomic variables. While 92% of the rural hillsides population in Honduras lives on US$1.00/capita/day or less, households that follow a livelihood strategy based on basic grain farming are the poorest because they often live in isolated areas with relatively poor agro‐ecological and socioeconomic conditions. Opportunities for off‐farm work tend to be limited in these areas and household strategies that combine on‐farm work with off‐farm work earn higher incomes. Per capita incomes can be increased by improving road infrastructure, widening access to land, policies that reduce household size and dependency ratios, and adoption of sustainable land management technologies that restore soil fertility. We used probit models to show that the latter can be promoted by agricultural extension programs and land redistribution. Investments in physical assets should be directed toward households that pursue livelihood strategies based on off‐farm employment or coffee production, while agricultural training programs are best focused on livestock producers.     

Global market shocks and poverty in Vietnam: the case of rice

World food prices have experienced dramatic increases in recent years. These “shocks” affect food importers and exporters alike. Vietnam is a major exporter of rice, and rice is also a key item in domestic production, employment, and consumption. Accordingly, rice price shocks from the world market have general equilibrium impacts and as such, their implications for household welfare are not known ex ante. In this article, we present a framework for understanding the direct and indirect welfare effects of a global market shock of this kind. We quantify transmission of the shock from global indicator prices to domestic markets. Then we use an applied general equilibrium model to simulate the economic effects of the price changes. A recursive mapping to a nationally representative household living standards survey permits us to identify in detail the ceteris paribus effects of the shock on household incomes and welfare. In this analysis, interregional and intersectoral labor market adjustments emerge as key channels transmitting the effects of global price shocks across sectors and among households.     

The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya1

This study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural Kenyan households. The usual first‐order welfare approximation formula is extended to a second‐order formula that allows for supply and demand responses to the price change. Results show that many rural households are not affected greatly by the price change, and there are about as many gainers as losers. However, these full sample results mask important differences across regions. Welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize. Semiparametric methods are used to investigate the relationship between income and the size of the welfare effect, and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty.     

Health and hunger: nutrient response to income depending on caloric availability in Nepal

Using data from NLSS III, we estimate nutrient‐income elasticities for macronutrients, vitamins, and minerals. We further allow for differential nutrient demand response to income depending on where a household is in the caloric availability distribution. We find that some nutrients are income inelastic indicating that they are necessity goods while others are relatively income elastic. We further test and reject equivalent nutrient‐income elasticities across the caloric availability distribution. Households in the lowest calorie quintile have highly income elastic nutrient demand leaving them vulnerable to income fluctuations. Moreover, as households meet their first‐order caloric needs, they substitute away from cheap calorie‐dense staples toward more expensive nutrient‐dense foods. Finally, for most nutrients, households in the highest calorie quintile exhibit more elastic nutrient demand, similar to households in the lowest quintile. Our results suggest that policies aimed at improving income will likely also improve household nutrient availability, particularly for the most calorie poor households. They further suggest that policies aimed at protecting poor households from negative income shocks will also likely yield nutritional benefits.     

The capability approach as a framework for assessing the role of microcredit in resource conversion: the case of rural households in the Madagascar highlands

This article applies the capability approach in order to analyse microcredit as a tool for resource conversion, which permits poor households to take advantage of latent opportunities. This approach calls for linking microcredit with the choices of the poor themselves. A sample of 290 rural households from the Madagascar highlands was surveyed over two consecutive years. To identify the most relevant dimensions of poverty available for a conversion process, data were processed using factor analysis. A hierarchical classification then permitted the distribution of the households over three capability levels. Finally, an ordered multinomial logit brings out how microcredit influences the likelihood that a household receiving such a loan will reach a higher capability level. The main findings indicate that microcredit represents a robust means to obtain a higher level of capability. Moreover, when the process of borrowing endures, poor households enter into a learning process that increases the effect of microcredit. Regardless of the gender of the household head, microcredit increases the probability of reaching an enhanced level of capability, except for the poorest households headed by a woman. The head of household’s level of education only improves the effect of microcredit if the productive system implemented needs specific competencies related to educational attainment.     

不同模式下农村宅基地退出的农户福利效应研究以福建省晋江市为例

目的 为合理引导农村宅基地有序退出并制定出科学的宅基地退出管理策略,亟需开展不同模式下农村宅基地退出的农户福利效应研究,准确把握农户在此过程中的生活质量变化状况。方法 文章以阿玛蒂亚·森提出的可行能力理论为基础,构建宅基地退出的农户福利评价指标体系,利用晋江市的调研数据,运用模糊数学综合评价方法,评价和比较不同模式下农村宅基地退出的农户福利效应及其差异。结果 资产置换模式和指标置换模式下宅基地退出后农户的总福利水平都有所改善,总模糊指数分别从0.378、0.404上升到0.399、0.418,货币补偿模式总福利水平则呈下降的状态,从0.412下降到0.373。其中资产置换模式和指标置换模式在社会保障、居住条件和心理状况的农户福利水平有所上升,家庭经济和决策参与的农户福利水平下降,两者改变程度有所差异。货币补偿模式只有居住条件的农户福利得到改善。宅基地退出后农户之间的福利差异进一步扩大,福利差异系数从0.114上升到0.147。结论 不同模式的宅基地退出致使农户福利效应差异明显,使其对农户的生活方式和长远生计的影响程度有所不同。因此,应综合考虑不同宅基地退出模式下农户福利效应差异,从科学设定宅基地退出的补偿标准、规范宅基地退出程序、分类实施宅基地退出保障措施等方面提升农户福利水平和促进农户福利均衡发展。     

Livelihood diversification strategies in the Himalayas*

This article examines livelihood diversification strategies of rural households using survey data from the Himalayas. We present and explore an analytical framework that yields different activity choices as optimal solutions to a simple utility maximization problem. By classifying the range of activities of rural households into a few distinct categories based on their profitability and by considering portfolios of farm and non‐farm activities, we provide novel insights into diversification behaviour of rural households. The evidence shows that while the poor are mainly agricultural labourers and work in the low‐return non‐farm sector, the better‐off diversify in high‐return non‐farm activities. As expected, we find strong evidence that education plays a major role in accessing more remunerative non‐farm employment. A somewhat less intuitive finding is that larger household size is associated with higher probability of diversification into the high‐return non‐farm sector. The finding that the farm size is not a constraint to diversification in lucrative non‐farm employment is also surprising. Geographical location plays a role in diversification behaviour of rural households indicating the importance of local context.     

Managing groundwater in a mining region: an opportunity to compare best‐worst and referendum data

In nonmarket valuation, practitioners must choose a format for the valuation questions. A common approach in discrete choice experiments is the ‘pick‐one’ format, often with two alternative policy proposals and a status quo from which the respondent selects. Other proposed formats, include best‐worst elicitation, where respondents are asked to indicate their most and least favoured alternative from a set. Although best‐worst formats can offer efficiency in data collection, they can also lead to responses that are difficult to reconcile with neoclassical welfare estimation. The current article explores methodological issues surrounding the use of pick‐one versus best‐worst data for nonmarket valuation, focusing on framing and status quo effects that may occur within three‐alternative discrete choice experiments. We illustrate these issues using a case study of surplus groundwater use from Western Australian mining. Results identify concerns that may render best‐worst data unsuitable for welfare estimation, including a prevalence of serial choices in which the status quo is universally chosen as the worst alternative, rendering part of the choice process deterministic. Asymmetry of preferences and serial choices can be obscured when models are estimated using ‘naively’ pooled best‐worst data. Results suggest that caution is warranted when using best‐worst data for valuation, even when pooled results appear satisfactory.