Type of Document Master's Thesis Author Andrade, Robert Santiago Author's Email Address firstname.lastname@example.org URN etd-08072008-160745 Title Livelihood strategies of farmers in Bolivar, Ecuador: asset distribution, activity selection and income generation decisions in rural households Degree Master of Science Department Agricultural and Applied Economics Advisory Committee
Advisor Name Title Alwang, Jeffrey R. Committee Chair Kuminoff, Nicolai V. Committee Member Norton, George W. Committee Member Keywords
- livelihood strategies
Date of Defense 2008-06-10 Availability unrestricted AbstractHouseholds in rural Ecuador face several challenges. One of them is the severe
deprivation that reaches alarming percentages in the countryside. Unequal distribution
and limited assets constrain households from improving their economic conditions. These
factors induce households to overexploit natural resources. Poor households engage in a
variety of livelihood strategies. Livelihood strategies are characterized by the allocation
of assets (natural, physical, financial, public, social and human), income-earning
activities (on farm, off farm), and outcomes (food, income, security). Together these
determine the well-being attained by an individual or households.
We used data collected by INIAP as part of the SANREM-CRSP project to identify
livelihood strategies, their determinants, and well-being implications of adopting a
particular livelihood. These data were from a comprehensive survey of 286 households
collected during September and November, 2006.
Livelihood strategies for the Chimbo watershed were identified using qualitative and
quantitative methods. The methods provide similar results and identified four main
livelihoods: households engaged in diversified activities, agricultural markets, non-farm
activities, and agricultural wage work. Most households are engaged in agricultural
markets followed by households in diversified activities. Households engaged in
agricultural markets own higher amounts of natural and physical resources, while
households engaged in non-farm activities have, on average, more human capital.
Households participating in agricultural wage work are mainly from the down-stream
watershed and posses less natural, physical and human assets.
Factors influencing the selection of livelihood strategies were examined using a
multinomial logit model. Variables such as access to irrigation, amount of farm surface
and value of physical assets were statistically significant determinants of livelihood
selection. Households with higher endowments of natural and physical assets are more
likely to engage in agricultural markets and less likely to participate in non-farm
activities. Secondary education tends to decrease participation in the agricultural sector
while increasing engagement in non-farm activities. Several geographic variables like
watershed location, altitude, and distance to rivers and cities are statistically significant
determinants of livelihood strategies.
The well-being associated with each livelihood strategy was estimated using least
squares corrected for selection bias. Since participation in each livelihood is
endogenously selected it was necessary to correct for selection. We use the Dubin-
McFadden (1984) correction, based on the multinomial logit model.
In our models of well-being few variables were statistically significant; this may be
due to data limitations. Credit is statistically significant and has a positive effect on wellbeing.
A similar positive effect is shown by education but the variable is not statistically
significant. An odd result was found in the coefficient of irrigation access. This
coefficient appears to decrease household well-being for those engaged in agricultural
markets. This result is hard to explain, as we would expect that irrigation would be
positively associated with well-being. The lack of access to water in irrigation systems in
the region (noted by many respondents) might explain this negative effect. Most
households that access irrigation do not have enough water, and access to irrigation does
not provide the advantages that it might otherwise.
The selection models were used to estimate the amount of well-being that households
currently engaged in other livelihoods might receive if they selected a different
livelihood. For example, what level of wellbeing would be attained by households
currently engaged in agricultural markets if they instead engaged in non-farm activities.
Results indicate that most households might achieve higher well-being if they engaged in
non-farm activities. However households that want to engage in this sector require
special skills or assets that are not easy to obtain; thus there are constraining barriers to
diversification in the watershed.
Several policy changes were simulated to determine their impacts on livelihood
choice and household well-being. First a policy change that provides wider education to
households in the region was assumed, with more education livelihood strategy selection
moves towards the non-farm sector and away from agricultural wage work. These
changes generate positive effects on household well-being. The second policy change
was creating wider access to irrigation. This change moves livelihood strategies towards
agricultural production and away from diversification and non-farm activities, and it had
the effect of decreasing household well-being. This was unexpected but it is explained by
the negative coefficient of irrigation access in the well-being model. These two policy
changes were made to variables that are not statistically significant determinants in the
well-being models but were highly significant determinants of livelihood strategies.
The third and final policy was wider access to formal credit. Although credit is not a
variable that affects the selection of livelihood strategies, it has an important effect on
well-being. This policy change generates the highest increment in average well-being.
However even though credit is available, if it is not used for productive purposes, it might
represent an unnecessary cost for the households instead of being beneficial.
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