What is livelihood? "A livelihood comprises capabilities, assets (including both material and social resources) and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stresses and shocks and maintain or enhance its capabilities and assets both now and in the future, while not undermining the natural resource base".
Loosely defined, rural livelihood system (RLS) goes to imply a matrix of options and opportunities that households embark upon to eke out a living in a regime of limited endowment of natural resources and plentiful supply of labour. The concept is a congregation of many factors including, obviously, crisis-coping mechanisms.
The RLS encompasses actions on the part of the households that are being undertaken not only for ensuring a bare minimum living or for facing crises, but also for seizing upon opportunities to expand the frontiers of choice set. Such a system thrives not only on production system per se but also on rural markets (e.g. credit, tenancy, land, water etc.), rural non-market institutions and social and infrastructural facilities available in rural areas.
A framework to understand rural livelihoods in terms of (a) people's access to five types of capital assets, (b) the ways in which they combine and transform these assets in the building of livelihoods that, as far as possible, meet their material and experimental needs, (c) the ways in which people are able to expand their asset bases by engaging in other actions through relationships governed by the interactions of the operations of the state, market and civil society and (d) the ways in which they are able to deploy and enhance their capabilities both to make living more meaningful and to change the dominant rules and relationships governing the ways in which resources are controlled, distributed and transformed in society.
The possession of human capital not only implies that people produce more efficiently; it also gives them the capability to engage more fruitfully and meaningfully with the world, and most importantly, it connotes the capability to change the world.
THE VULNERABILITY CONTEXT: Empirical evidences show that different types of trends and external factors impinge negatively on the livelihoods of the poor. For example, floods, cyclones, erosion of river-banks or insecurity from lawlessness, abnormal increase in food prices in the international market etc. could adversely affect the livelihood of the people and their asset endowments. If unaddressed, such conflicts can marginalise low-income households already on the fringe of a fall from the fortunes. In a rural setting, it may be necessary to find answers - as we have attempted to search in this book - to understand the demographic structure and its change, utilization and accumulation of assets, level and distribution of income, the intensity and the severity of poverty, and the capacity of coping with external shocks.
LIVELIHOOD ASSETS: Five types of capital or assets can be identified in this context: natural, physical, financial, human and social. Assets are both created and destroyed as a result of the trends, shocks and seasonality of the vulnerability context. Vulnerable people always tend to vent for extraction of the natural resources, no matter what they value in terms of sustainability. To them, the present is of more serious concern with regard to livelihoods than the future, and the poorer the household, the higher is the discount for the future.
Land, water, and biotic resources (crop varieties and beneficial organism) are important natural capital, which people can draw on for agricultural production. Physical capital, such as agricultural and non-agricultural machinery and equipment or livestock holdings, are formed from the utilization of surplus of agricultural production over what is required for the basic needs of the family. It is, of course, true that a single physical asset can generate multiple benefits. For example, access to secure land may lead to the access to financial capital or, livestock may generate social capital (prestige and connectedness to the community) for owners as well as emerge as a source of productive physical capital. It may be noted here that the government's policy to invest in basic infrastructure or technology generation or the existence of local institutions could help arrest encroachment upon natural resource base and thus contribute to the creation of assets. Availability apart, the determinant of access to the assets is ownership rights, markets and institutions regulating access to common resources.
NATURAL CAPITAL: Natural capital is the term used for the natural resource stocks from which products and services (e.g. nutrient cycling, erosion protection) are derived for livelihoods. Examples of natural capital are land, forests, marine and wild resources, crop varieties and beneficial organisms that help sustain natural biological control. Access to natural capital is very important to those who derive all or part of their livelihoods from resource-based activities such as farming, fishing, forest extraction and mining.
HUMAN CAPITAL: It represents skills, knowledge, health etc. that enable people to reap home a better harvest from their hard labour. This is the building block or means of achieving livelihood outcomes. Good health is the most important human capital for the poor.
SOCIAL CAPITAL: There are many connotations to this but, suffice it to say, it implies social resources upon which people draw in pursuance of their livelihoods. The main pillars of social capital are network and connectedness, formalised group setting and trust, reciprocity and exchange.
PHYSICAL CAPITAL: Infrastructure such as roads, rails, telecommunication is essential ingredients for the integration of remote areas where many poor people live. The presence of infrastructure, such as roads and telephones, cuts into the crisis in two distinct ways: first, it enhances mobility of the people in terms of migration and second, increases malleability along the ladder of opportunity set.
FINANCIAL CAPITAL: Financial capital - savings, inventories, access to credit - goes to denote financial resources that are needed (and people try to take hold of) for livelihood objectives. Financial resources are not end in themselves but means to an end e.g. livelihood.
The writer is a Professor of Economics at Jahangirnagar University. [email protected]
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