The diversification as a sustainable livelihoods approach is a concept that is fast gaining popularity and becoming increasingly important in the field of development. It is an attempt to go beyond the conventional definitions and approaches to poverty eradication (Krantz, 2001, p. 6). Despite significant economic progress in developing countries in recent years, there are still high levels of poverty, particularly in the rural areas. Approximately seventy percent of the world's poor live in the rural areas with South Asia having the largest number of poor rural people and sub-Saharan Africa having the highest incidence of rural poverty (RPR, 2011, p. 16).
Though livelihoods are diverse and vary depending on region, resources and cultures, in most developing countries, rural households heavily rely on income from the agricultural sector. Livelihoods are obtained from subsistence farming and agricultural labor. However, it has been noted that rural non-farm income sources are gaining importance, as well as increasing income-seeking migration. Households are increasingly looking for ways to diversify their livelihood.
Thus, methods of creating sustainable rural livelihoods for indigenous communities are becoming central to the debate about rural development, poverty reduction and environmental management (Scoones, 1998, p. 3). This paper aims to discuss the sustainable livelihoods approach and the diversification strategies aimed at achieving sustainable rural livelihoods, their effectiveness and implications.
DETERMINANTS OF DIVERSIFICATION AND STRATEGIES
A livelihood comprises the capabilities, assets and activities required as a means to a living. A livelihood is sustainable if it can cope with and recover from, stresses and shocks, maintain or enhance its capabilities and assets and provide net benefits to other livelihoods locally and more widely, both now and in the future, without undermining the natural resource base (Carswell, 1997, p. 3).
The strategy employed to achieve a sustainable livelihood is dependent on the context (socio-economic, political and environmental) and resources (physical, human and social capital). Diversification is a tactic rural households are increasingly employing due to the changes the world is currently facing in terms of population growth, urbanization, globalization and climate change. These trends have led to land expropriation and privatization, expansion of commercial agriculture and population pressures in many developing countries. The majority of the rural population and indigenous people have been pushed to low-potential land and have limited opportunities. Not only does this have a negative economic impact, but also a detrimental effect on the environment. It leads to the rural households overexploiting the few resources available to them through poor agricultural practices that lead to degraded soils and land, erosion, deforestation, vulnerability to drought and other natural disasters. However, environmental sustainability is essential to achieving sustainable livelihoods and rural development.
Due to the limited opportunities available to them, rural households accordingly seek various ways of obtaining an income. The ability to pursue different livelihood strategies though is dependent on the basic material and social, tangible and intangible assets that people have in their possession. A distinction is consequently made between choice and necessity when households employ diversification as a livelihood strategy.
Necessity refers to involuntary and desperate reasons for diversifying (Ellis, 2000, p. 291). It is a reactive measure to adverse events (such as environmental degradation, displacement, natural disasters). It usually results in households adopting more vulnerable livelihood system than they previously possessed (Ellis, 2000, p. 292). On the other hand, diversification by choice is a proactive and voluntary measure to increase the household's prospects, capacity and opportunities. The determinants of diversification are discussed in the next section.
Determinants of Diversification
Ellis (2000) theorizes that the motives behind diversification may be divided into five main considerations (p. 292). These are seasonality, risk, labor markets, credit markets and coping behavior. They mainly apply to developing countries.
Starting with seasonality, as noted previously most indigenous people depend on agricultural output and labor as a source of income. Given the cyclical nature of the agricultural sector (which affects both subsistence and commercial agriculture), many rural households face seasonal income sources. In order to avoid the risks of depending on an uneven income source, income diversification is used to supplement their livelihoods during off-season periods.
Risk strategy is the diversification of income sources due to anticipating possible adverse events and failure of a single livelihood means. The different sources have different levels of risk. This means that the factors that create risk for one income source (such as climate) are not the same as the factors that create risk for another income source (like urban job insecurity) (Ellis, 2000, p. 294).
The labor market is another determinant cited by Ellis (2000, p. 295). Labor markets offer non-farm opportunities for income generation. Some individuals of rural households may opt to seek employment opportunities in other industries. Rural non-farm industries are on the rise for instance tourism and crafts (basketry, pottery, etc). However, they are differentiated by education, skills and gender factors.
As a result of the low credit availability in rural areas, rural households are motivated to diversify their income. Most of the rural population is unable to access credit and loans to finance their farm activities, such as purchasing agricultural inputs. To counter the credit market failure in rural areas, households seek alternative income which they plough back to invest in their farms.
Coping behavior refers to diversification as an unplanned response to crisis which leads to a search for new income sources (Ellis, 2000, p. 297). Sudden catastrophes resulting in the loss or destruction of productive assets push households to seek other methods of survival. Indigenous people are most vulnerable to catastrophes (whether natural or man-made) because often they lack the necessary resources to prepare or respond and are therefore most adversely affected.
These are some of the reasons for increasing diversification away from reliance on farming. Given precarious conditions indigenous people face, alternative sources of income decreases their vulnerability. The rural households thus can pursue different (or a combination of) livelihood strategies.
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