Livestock, Activity Choices and Conflict: Evidence from Burundi
Standard economic risk theory postulates that in the absence of credit markets, wealthier households will engage in higher-risk, higher profit activities to generate income while poor households will specialize in low-risk activities with low returns. The rationale is that wealthier households can deplete savings when things go wrong whereas poor household cannot. This theoretical argument has been tested for several countries and is generally validated by the data. However, existing studies on the relation between savings and activity choices implicitly assume that savings are certain or risk-free. This study suggests that explicitly allowing household savings or assets to be risky can yield results that differ considerably from the pattern predicted by the standard theoretical model. Using data from the 1998 household priority survey in Burundi, we estimate the relationship between household savings (livestock) and choices of incomegenerating activities (risky vs. less-risky activities). We exploit the fact that surveyed households in certain regions in Burundi were exposed to a relative higher level of risk and uncertainty due to the civil war preceding and during the time of the survey. We find that in general household savings exercise their usual risk-taking effect, though that this effect disappears and even reverses for households in the conflict affected regions. In those regions, wealthier households do not reduce allocation to low-risk low-return activities. We argue that this finding can probably (in part) explain the massive increase in poverty in the provinces exposed to the war during the 1990-1998 period. In this fashion, we argue that a type of ’productive social safety net’, as recently discussed in the development literature, could possibly be an effective policy measure to lower the increased asset risk induced by conflict.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tilman Brück, 2004.
"The Welfare Effects of Farm Household Activity Choices in Post-War Mozambique,"
HiCN Working Papers
04, Households in Conflict Network.
- Tilman Brück, 2004. "The Welfare Effects of Farm Household Activity Choices in Post-War Mozambique," Discussion Papers of DIW Berlin 413, DIW Berlin, German Institute for Economic Research.
- Newell, Andrew & Pandya, Kiran & Symons, James, 1997. "Farm Size and the Intensity of Land Use in Gujarat," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 307-15, April.
- Bruce, John W., 1998. "Review Of Tenure Terminology," Tenure Briefs 12814, University of Wisconsin-Madison, Land Tenure Center.
- Feder, Gershon & Noronha, Raymond, 1987. "Land Rights Systems and Agricultural Development in Sub-Saharan Afric a," World Bank Research Observer, World Bank Group, vol. 2(2), pages 143-69, July.
- Strasberg, Paul J. & Kloeck-Jenson, Scott, 2002. "Challenging Conventional Wisdom: Smallholder Perceptions And Experience Of Land Access And Tenure Security In The Cotton Belt Of Northern Mozambique," Working Papers 12794, University of Wisconsin-Madison, Land Tenure Center.
- Binswanger, Hans P & McIntire, John, 1987. "Behavioral and Material Determinants of Production Relations in Land-Abundant Tropical Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 73-99, October.
- Deininger, Klaus & Castagnini, Raffaella, 2006.
"Incidence and impact of land conflict in Uganda,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 60(3), pages 321-345, July.
- Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
- Lastarria-Cornhiel, Susana, 1997. "Impact of privatization on gender and property rights in Africa," World Development, Elsevier, vol. 25(8), pages 1317-1333, August.
- Singh, Inderjit & Squire, Lyn & Strauss, John, 1986. "A Survey of Agricultural Household Models: Recent Findings and Policy Implications," World Bank Economic Review, World Bank Group, vol. 1(1), pages 149-79, September.
- Pak Hung Mo, 2003. "Land Distribution Inequality And Economic Growth: Transmission Channels And Effects," Pacific Economic Review, Wiley Blackwell, vol. 8(2), pages 171-181, 06.
- Jayne, Thomas S. & Yamano, Takashi & Weber, Michael T. & Tschirley, David L. & Benfica, Rui M.S. & Neven, David & Chapoto, Antony & Zulu, Ballard, 2001.
"Smallholder Income and Land Distribution in Africa: Implications for Poverty Reduction Strategies,"
Food Security International Development Papers
54047, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Jayne, T. S. & Yamano, Takashi & Weber, Michael T. & Tschirley, David & Benfica, Rui & Chapoto, Antony & Zulu, Ballard, 2003. "Smallholder income and land distribution in Africa: implications for poverty reduction strategies," Food Policy, Elsevier, vol. 28(3), pages 253-275, June.
- Jayne, Thomas S. & Yamano, Takashi & Weber, Michael T. & Tschirley, David L. & Benfica, Rui M.S. & Neven, David & Chapoto, Antony & Zulu, Ballard, 2002. "Smallholder Income And Land Distribution In Africa: Implications For Poverty Reduction Strategies," 2002 Annual meeting, July 28-31, Long Beach, CA 19692, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Jayne, Thomas S. & Yamano, Takashi & Weber, Michael T. & Tschirley, David L. & Benfica, Rui M.S. & Chapoto, Antony & Zulu, Ballard & Neven, David, 2002. "Smallholder Income and Land Distribution in Africa: Implications for Poverty Reduction Strategies," Food Security International Development Policy Syntheses 11295, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Tschirley, David L. & Weber, Michael T., 1994. "Food security strategies under extremely adverse conditions: The determinants of household income and consumption in rural Mozambique," World Development, Elsevier, vol. 22(2), pages 159-173, February.
- Migot-Adholla, Shem, et al, 1991. "Indigenous Land Rights Systems in Sub-Saharan Africa: A Constraint on Productivity?," World Bank Economic Review, World Bank Group, vol. 5(1), pages 155-75, January.
- Andre, Catherine & Platteau, Jean-Philippe, 1998. "Land relations under unbearable stress: Rwanda caught in the Malthusian trap," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 1-47, January.
When requesting a correction, please mention this item's handle: RePEc:hic:wpaper:24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alia Aghajanian)or () or () or ()
If references are entirely missing, you can add them using this form.