Diversify Livelihood Risks
Livelihood diversification can improve resilience if efforts to increase income streams and assets diversify potential risks.

Livelihood diversification has long been recognized as a risk management strategy and source of resilience. However, it is complex; its association with positive or negative changes is not always clear. Diversification of activities may be less important than diversification of risk. Context is important in shaping the risk environment and range of livelihood opportunities open to people.
Approach
Diversifying livelihood risks can be achieved through several approaches. Stepping up within, stepping partially out, or moving entirely out of agriculture/livestock are possible strategies. Each of these methods diversify livelihood risks in different ways.
By stepping up within agriculture/livestock, agricultural diversification buffers risk. It increases agricultural trade and income — improving ability to build savings and/or buy insurance. By stepping partially out of agriculture/livestock, engaging in livelihoods with different risk profiles becomes possible. This complements agriculture-based livelihoods through activities related to agriculture/livestock or migration to urban labor markets. Finally, by moving out of agriculture/livestock entirely, movement into livelihoods with different risk profiles can be achieved.
Evidence
In Kenya’s Northern drylands, pastoralists gained greater control over natural resources by commercializing their activities. They were able to “step up” by amassing larger herds. This allowed them to privatize key rangeland resources and capitalize on growing demands for meat. As a result, they became better suited to withstand and recover from drought and shocks.
“Stepping up” or “moving out” may not be an effective strategy for all farmers though. Poorer individuals with smaller herds are less able to capture private land and market opportunities. Consequently, they often struggle to withstand recurrent shocks.
Evidence on "stepping partially out" through migration suggests removing capital constraints to migration can positively impact seasonal hunger and well-being. An experimental study in Bangladesh found that households given cash or credit travel subsidies were more likely to migrate. The migrants saved and carried back about half of what they earned. Their families consumed more calories per person per day, raised per capita expenditures, increased protein consumption, and spent more on child education. The same amount of food in the form of food aid would cost five times as much. However, changes in the demand for migrant labor and the long-term social costs of splitting up families for extended periods will influence the ultimate effect of migration on resilience.
Featured Resources
Resource
This report presents the findings of a Livelihoods Diversification Analysis that aims to inform the development of future programmatic...
Training
This course was designed for USAID staff and implementing partners, and explores the types of strategies, assets, and resources people can use to...
More Resources
-
Resource
This report presents the findings of a Livelihoods Diversification Analysis that aims to inform the development of future programmatic interventions and strategic efforts to promote livelihood diversification in the Sahel by the USAID Sahel Regional Office at USAID/Senegal.
Diversify Livelihood RisksNigerBurkina Faso -
Resource
This report documents the resilience analysis of the baseline data collected for the impact evaluation (IE) of the Resilience in the Sahel Enhanced (RISE) initiative.
Evidence and AnalysisDiversify Livelihood RisksBurkina FasoNiger -
Event
The 2019 SEEP Annual Conference theme – Building Resilience through Market Systems – will highlight proven and experimental strategies that harness the potential of the market to support people, enterprises and communities that are highly vulnerable to the shock-stress-shock...
SystemsDiversify Livelihood RisksGender EquityAccess to Markets -
Resource
This synthesis paper reviews 20 years of research and focuses on the increasing socioeconomic differentiation in selected pastoralist areas, and the implications in terms of pathways to resilience.
HealthEducationDiversify Livelihood RisksSocial CapitalGender EquitySouth SudanKenyaEthiopiaUgandaSomalia -
Resource
This report presents findings from a recurrent monitoring survey that was conducted during a time when Somalia was experiencing a severe drought. The report discusses several factors that helped household resilience during the drought, including informal social networks and access to information...
Evidence and AnalysisDiversify Livelihood RisksSomalia -
-
-