Poor and vulnerable people face a number of risks in their everyday lives, and their livelihoods are unlikely to be sustainable unless they can cope with the different shocks that affect them. Shocks are generally grouped into two kinds: household-level shocks, such as illness, injury and unemployment (in technical language, these are called ‘idiosyncratic’ shocks) and community-level shocks, such as disasters, epidemics and conflicts (‘covariate’ shocks). Both types can have sudden or severe impacts on individual households’ incomes, consumption and resources, as well as household members’ wellbeing.
Possession of assets (or capital) gives households a wider range of options and livelihood opportunities in times of crisis, and it can speed their recovery from some kinds of hazard event (although the most extreme events may be highly destructive). These assets/capital may be of many kinds: human (e.g. skills, knowledge, ability to labour, good health); physical (e.g. livestock, transport, tools and equipment, shelter, water supplies and sanitation); natural (e.g. possession of land, forests, marine/wild resources, water resources); financial (e.g. income and savings, earnings, credit, remittances); human (e.g. skills and education); social (e.g. networks and connections, membership of groups, relationships of trust, reciprocity and exchange); and political (e.g. connections to power structures, political systems and governmental processes). However, even a relatively mild shock or stress can have a severe impact on chronically vulnerable households: for example, irregular or unexpected rainfall at a key stage in the crop growing cycle, which ruins the harvest. Vulnerable households have little or no capacity to absorb losses of assets and income or to recover from them, driving them further into poverty and vulnerability.
The natural environment provides resources and livelihood opportunities, as well as presenting risks. Hazardous locations may be used for farming, grazing and extraction of natural resources such as timber and minerals. Volcanic soils, for example, tend to be very fertile, as are the alluvial soils of flood plains; space for workshops and factories is likely to be cheaper in flood-prone locations. The most marginal groups in society are generally forced to accept the greatest risks in seeking to make a living on unproductive or risk-prone land. Their choices are restricted by the socio-economic systems they live under, particularly with regard to land tenure and distribution. Lack of land rights and titles inhibits household investment in risk reduction measures and reduces economic opportunities.
This chapter looks at ways of protecting and supporting livelihoods through DRR. It should be read alongside chapters 7 (Indigenous knowledge and coping strategies), 12 (Financial mechanisms and services for risk reduction) and 14 (Drought, food security and famine), which cover other important aspects of making livelihoods more resilient and sustainable.
Livelihoods are constantly having to adapt to a wide variety of factors, including costs, prices, supply and demand and the availability of natural resources, materials, labour and credit, as well as environmental conditions and access to markets. Livelihood opportunities are also influenced by status, gender, education, technical skills and social networks. Poor households adopt carefully calculated financial management strategies to maximise their use of resources and mitigate their exposure to risks.+D. Collins et al., Portfolios of the Poor: How the World’s Poor Live on $2 a Day (Princeton, NJ: Princeton University Press, 2009). Government agencies and other institutions provide the policy and enabling environment that can support or constrain livelihood development and wealth creation.