This document outlines concepts and strategies related to rural livelihoods and diversification. It discusses: 1) Key concepts like sustainable livelihoods, which allow people to cope with stresses and maintain assets, and rural livelihood diversification, which involves households constructing diverse income activities. 2) The Sustainable Livelihoods Approach framework for understanding poverty, which is people-centered, holistic, dynamic, builds on strengths, and promotes sustainability. 3) Rural livelihood strategies like savings, social networks, and diversifying income sources from both farm and non-farm activities in response to changing circumstances.

1. LECTURE 3: LIVELIHOOD AND
RURAL DIVERSIFICATION
October 28, 2015

2. LECTURE OUTLINES
• Concepts and definition
• Dimensions of vulnerable livelihoods
• The Sustainable Livelihoods Approach
• Sustainable livelihoods; poverty and vulnerability
• Livelihood strategies
• Livelihood strategies adaptation
• Income diversification is an important livelihood strategy for
rural households
• Poverty and rural livelihoods: the locational dimension
• Utilizing the Sustainable Livelihood Framework for livelihood
analysis

3. CONCEPTS AND DEFINITION
Livelihoods definition
• The dictionary definition of livelihood is a ‘means to living’
• A livelihoods comprises the assets (Natural, Physical, Human,
Financial and Social Capital), the activities and the access to these
(mediated by institutions and social relations) that together
determine the living gained by the individual or household
(Chambers and Conway, 1992).
Sustainable livelihood
• A livelihood is sustainable when it can cope with and recover from
stresses and shocks, maintain or enhance its capabilities and
assets, while not undermining the natural resource base.
Rural livelihood diversification
• Rural livelihood diversification is defined as the process by which
rural households construct an increasingly diverse portfolio of
activities and assets in order to improve their standard of living

4. The Sustainable Livelihoods Approach
The sustainable livelihoods approach ( SLA ) is a way to improve
understanding of the livelihoods of poor people.
The two key components of the SLA are:
• A framework that helps in understanding the complexities of
poverty
• A set of principles to guide action to address and overcome
poverty

5. SLA has seven guiding principles which are:
• Be people-centred. SLA begins by analysing people's livelihoods and how they
change over time. The people themselves actively participate throughout the project
cycle.
• Be holistic. SLA acknowledges that people adopt many strategies to secure their
livelihoods, and that many actors are involved; for example the private sector,
ministries, community-based local as well as international organizations.
• Be dynamic (self-motivated). SLA seeks to understand the dynamic nature of
livelihoods and what influences them.
• Build on strengths. SLA builds on people's perceived strengths and opportunities
rather than focusing on their problems and needs. It supports existing livelihood
strategies.
• Promote micro-macro links. SLA examines the influence of policies and institutions
on livelihood options and highlights the need for policies to be informed by insights
from the local level and by the priorities of the poor.
• Encourage broad partnerships. SLA counts on broad partnerships drawing on both
the public and private sectors.
• Aim for sustainability. Sustainability is important if poverty reduction is to be lasting.

6. Dimensions of Vulnerable Livelihoods
• Vulnerability: the probability that livelihood stress will
occur/degree of risk and ability to cope with it.
• Vulnerable to external events (shocks and stresses) and
internal (household) constraints.
• Vulnerability depends on the ability of the livelihood system
to absorb/use/exploit change (system, resilience’) and the
degree to which a system changes (system ‘sensitivity’)

7. Livelihoods vs Sustainable
Livelihoods
Livelihoods
Objective -Access to food
Vulnerability - Lack or
want of food
Coping strategies – to
maximise immediate
consumption
Sustainable Livelihoods
Objective - Secure and
sustainable living
Vulnerability- Livelihood
system not resilient &
sensitive to risks &
shocks
Coping strategies – to
preserve and build
livelihoods

8. LIVELIHOOD STRATEGIES
A range of activities and resources:
• Savings and borrowings
• Accumulation
• Changes in consumption patterns
• Labour and asset pooling
• Technological adaptation
• Social networking
• Labour market involvement (in which men and women engage to
generate food, income and well-being). It draws on:
• Physical, human and collective assets, and

9. LIVELIHOOD STRATEGIES ADAPTATION
Changes in
• Circumstances
• Season
• Locale
• Climate
Changes in
• Life cycle
• Household structure
In response to the above, they move between the stages of survival,
stability and growth (Grown and Sebstad, 1989).

10. Income Diversification is an Important Strategy
for Rural Households
Diversity and diversification
• Diversity refers to the existence, at a point in time, of many different
income sources while diversification is an ongoing social and
economic process, reflecting factors of both pressure and opportunity
that cause families to adopt diverse livelihood strategies.
• Different meanings of diversification: survival, income smoothing, risk
reduction, accumulation.
• Agriculture an important income source but rarely do rural households
rely only on one ‘occupation’.
• Non-farm income sources are over 50% in Asia and 30-50% in SSA
(Depeasantisation?).
• Livelihood activities demonstrate that rural and urban links are strong.
• With process of globalization, formal-informal divide becoming weaker.

11. Livelihood Diversification

12. POVERTY AND RURAL LIVELIHOODS: THE
LOCATIONAL DIMENSION
Rural Poverty:
• Income poverty;
• Infrastructure poverty - disadvantaged in terms of facilities (schools/
education), and outcomes
Why are rural areas the sites of massive poverty?
• Rural areas ignored by academics, politicians and practitioners
• Development focus on ‘high potential’ rather than complex, isolated
and risk prone rural areas (see Development Policy Review, 2001,
19(4))
• Rural potential criteria focus on agriculture – non recognition of
other assets.

13. THE THREE RURAL WORLDS
3 Rural Worlds Agriculture-based Transforming Urbanized
Rural Pop (in millions), 2005 417 2200 255
Share of rural pop 68 63 26
GDP per capita ($) 379 1068 3489
Share of agric in GDP 29 13 6
Agri’s contribution to growth 32 7 5
No. of rural poor (millions) 170 583 32
Rural povertyrate 51 28 13
Urban poverty rate 45 11 6
Source: WDR 2008

14. Sustainable Livelihood Framework for
livelihood analysis