The dynamics of livelihood diversification in post-famine Ethiopia

Based on data for almost 300 households this paper explores associations among income diversification, household perceptions of livelihood risks, and changes in consumption outcomes across two points in time in post-famine Ethiopia. Four key questions are addressed: i) To what extent did households emerging from the famine period with relatively higher income and calorie consumption levels also have a more diversified income base?; ii) Was higher income diversification in 1989 associated with higher income and consumption levels by 1994?; iii) Which households increased their share of income from non-cropping activities most during the inter-survey years?; and iv) Did household heads perceive a lack of non-farm income activities to be an important risk factor in famine vulnerability? We find that wealthier households tended to have more diversified income streams; those initially more diversified subsequently experienced a relatively greater increase in both income and calorie intake; households with a greater concentration of assets were more likely to fall in their relative outcome ranking (as were female-headed households); and, initially less diversified households subsequently realized greater gains in income diversification. We also find suggestive evidence that personal perceptions of risk factors guided subsequent diversification decisions. (C) 2001 Elsevier Science Ltd. All rights reserved.