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Livelihood diversification strategies in the Himalayas

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  • Rahut, Dil Bahadur
  • Scharf, Maja Micevska

Abstract

This article examines livelihood diversification strategies of rural households using survey data from the Himalayas. We present and explore an analytical framework that yields different activity choices as optimal solutions to a simple utility maximization problem. By classifying the range of activities of rural households into a few distinct categories based on their profitability and by considering portfolios of farm and nonfarm activities, we provide novel insights into diversification behaviour of rural households. The evidence shows that while the poor are mainly agricultural labourers and work in the low-return non-farm sector, the better-off diversify in high-return nonfarm activities. As expected, we find strong evidence that education plays a major role in accessing more remunerative non-farm employment. A somewhat less intuitive finding is that larger household size is associated with higher probability of diversification into the high-return non-farm sector. The finding that the farm size is not a constraint to diversification in lucrative non-farm employment is also surprising. Geographical location plays a role in diversification behaviour of rural households indicating the importance of local context.

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  • Rahut, Dil Bahadur & Scharf, Maja Micevska, 2012. "Livelihood diversification strategies in the Himalayas," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 1-25, December.
  • Handle: RePEc:ags:aareaj:229819
    DOI: 10.22004/ag.econ.229819
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    1. Khondoker Abdul Mottaleb & Dil Bahadur Rahut, 2019. "Impacts of Improved Infrastructure on Labor Allocation and Livelihoods: The Case of the Jamuna Multipurpose Bridge, Bangladesh," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 750-778, September.
    2. Helmy, Imane, 2020. "Livelihood Diversification Strategies: Resisting Vulnerability in Egypt," GLO Discussion Paper Series 441, Global Labor Organization (GLO).
    3. Ma, Wanglin & Vatsa, Puneet & Zheng, Hongyun & Rahut, Dil Bahadur, 2022. "Nonfarm employment and consumption diversification in rural China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 582-598.
    4. Dil Bahadur Rahut & Akhter Ali & Menale Kassie & Paswel P. Marenya & Chudamani Basnet, 2014. "Rural Livelihood Diversification Strategies in Nepal," Poverty & Public Policy, John Wiley & Sons, vol. 6(3), pages 259-281, September.
    5. Ojo, T. & Baiyegunhi, L., 2018. "Determinants of Adaptation Strategies to Climate Change among Rice Farmers in Southwestern Nigeria: A Multivariate Probit Approach," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277011, International Association of Agricultural Economists.
    6. Diogo Ferraz & Fernanda P. S. Falguera & Enzo B. Mariano & Dominik Hartmann, 2021. "Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review," Sustainability, MDPI, vol. 13(3), pages 1-29, January.
    7. Nguyen, Trung Thanh & Nguyen, Thanh-Tung & Grote, Ulrike, 2022. "Internet use, natural resource extraction and poverty reduction in rural Thailand," Ecological Economics, Elsevier, vol. 196(C).
    8. Deepak Singh & Alok Kumar Mishra & Sridhar Patra & Anuj Kumar Dwivedi & Chandra Shekhar Prasad Ojha & Vijay P. Singh & Sankar Mariappan & Subhash Babu & Nisha Singh & Devideen Yadav & Prabhat Ranjan O, 2023. "Effect of Long-Term Tillage Practices on Runoff and Soil Erosion in Sloping Croplands of Himalaya, India," Sustainability, MDPI, vol. 15(10), pages 1-21, May.
    9. Wanglin Ma & Huanguang Qiu & Dil Bahadur Rahut, 2023. "Rural development in the digital age: Does information and communication technology adoption contribute to credit access and income growth in rural China?," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1421-1444, August.
    10. Shanta Paudel Khatiwada & Wei Deng & Bikash Paudel & Janak Raj Khatiwada & Jifei Zhang & Jiangjun Wan, 2018. "A Gender Analysis of Changing Livelihood Activities in the Rural Areas of Central Nepal," Sustainability, MDPI, vol. 10(11), pages 1-24, November.
    11. Dil Bahadur Rahut & Khondoker Abdul Mottaleb & Akhter Ali, 2018. "Rural Livelihood Diversification Strategies and Household Welfare in Bhutan," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(4), pages 718-748, September.
    12. Mark Musumba & Cheryl A. Palm & Adam M. Komarek & Patrick K. Mutuo & Bocary Kaya, 2022. "Household livelihood diversification in rural Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 246-256, March.
    13. Riithi, Alexander Njuguna & Irungu, Patrick & Munei , Kimpei, 2015. "Determinants Of Choice Of Alternative Livelihood Diversification Strategies In Solio Resettlement Scheme, Kenya," Dissertations and Theses 269714, University of Nairobi, Department of Agricultural Economics.
    14. Njue, E. & Kirimi, L. & Mathenge, M., 2018. "Uptake of Crop Insurance among Smallholder Farmers: Insights from Maize Producers in Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277023, International Association of Agricultural Economists.
    15. Dil Bahadur Rahut Chhetri & Pradyot Ranjan Jena & Akhter Ali & Bhagirath Behera & Nar Bahadur Chhetri, 2015. "Rural Nonfarm Employment, Income, and Inequality: Evidence from Bhutan," Asian Development Review, MIT Press, vol. 32(2), pages 65-94, September.
    16. Duy Linh Nguyen & Trung Thanh Nguyen & Ulrike Grote, 2023. "Shocks, household consumption, and livelihood diversification: a comparative evidence from panel data in rural Thailand and Vietnam," Economic Change and Restructuring, Springer, vol. 56(5), pages 3223-3255, October.
    17. Solomon Zena Walelign & Mariève Pouliot & Helle Overgaard Larsen & Carsten Smith-Hall, 2015. "A novel approach to dynamic livelihood clustering: Empirical evidence from Nepal," IFRO Working Paper 2015/09, University of Copenhagen, Department of Food and Resource Economics.
    18. Fang Wang & Jingyi Mao & Yafu Liu & Qihua Cai, 2023. "Influencing Mechanism of Rural Households’ Livelihood Capital on Entrepreneurial Behavior: Evidence from the CFPS," Agriculture, MDPI, vol. 13(9), pages 1-22, September.
    19. Shanta Paudel Khatiwada & Wei Deng & Bikash Paudel & Janak Raj Khatiwada & Jifei Zhang & Yi Su, 2017. "Household Livelihood Strategies and Implication for Poverty Reduction in Rural Areas of Central Nepal," Sustainability, MDPI, vol. 9(4), pages 1-20, April.
    20. Basanta Paudel & Yili Zhang & Jianzhong Yan & Raju Rai & Lanhui Li & Xue Wu & Prem Sagar Chapagain & Narendra Raj Khanal, 2020. "Farmers’ understanding of climate change in Nepal Himalayas: important determinants and implications for developing adaptation strategies," Climatic Change, Springer, vol. 158(3), pages 485-502, February.
    21. Misganaw Teshager Abeje & Atsushi Tsunekawa & Enyew Adgo & Nigussie Haregeweyn & Zerihun Nigussie & Zemen Ayalew & Asres Elias & Dessalegn Molla & Daregot Berihun, 2019. "Exploring Drivers of Livelihood Diversification and Its Effect on Adoption of Sustainable Land Management Practices in the Upper Blue Nile Basin, Ethiopia," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    22. Kiros Tsegay & Hongzhong Fan & AM Priyangani Adikari & Hailay Shifare, 2021. "Does gender matter for household livelihood diversification in Ethiopia rural areas?," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(6), pages 221-232, September.

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