New Directions for Agriculture in Reducing Poverty

Risk and Vulnerability Mailing List Archive


[Date Prev][Date Next][Thread Prev][Thread Next] [Date Index] [Thread Index] [Subject Index] [Author Index]

operationalising Social Risk Management



The World Bank's Social Risk Management Framework, in principle, covers
many aspects of risk and vulnerability, in both domestic and productive
spheres.

But in practice, its focus has been on providing a "trampoline" so that
those facing the risk of being forced out of productive activity (through
e.g. price shocks, bad weather etc) can "bounce back".

The paper below, prepared by John Farrington for the OECD PovNet, sets out
some of the shortcomings of the framework and suggests what would be
needed to operationalise risk and vulnerabililty-reducing mechanisms more
broadly. Are these ideas realistic, or do they demand too much of
governments?

John Farrington

DRAFT

Social Protection and Livelihood Promotion in Agriculture:

Towards Operational Guidelines

Paper for OECD Povnet

John Farrington
DFID, London
March 2004 

Executive Summary

The poor benefit from growth either through markets or (via taxation)
through transfers. For many, markets do not work well because risks are
high and ways of insuring against risk are unavailable. This paper asks
how poor people can be protected against many kinds of risk -
entrepreneurial and other. It argues that concerns over risk (often under
the rubric of social protection) tend to have been treated separately from
growth promotion, often by different departments within governments and
international agencies. Recent efforts to treat them more coherently are
to be welcomed. They are an important step in reducing poverty both
directly and by promoting closer engagement by the poor in markets and in
entrepreneurial activity. Taking agriculture as one example of a
productive sector, and taking the World Bank's Social Risk Management
(SRM) framework as a starting point, this paper argues that some
modifications to the framework are necessary to ensure that the potential
implications of agriculture policy decisions for social protection (SP),
and vice versa, are taken into account, and that options and trade-offs
within individual policy areas are considered. Modifications are also
necessary to ensure that shocks and stresses in the domestic and
productive spheres facing given households are treated coherently.



The paper argues that questions of how to operationalise the principles
contained in the (modified) SRM approach are of crucial importance, but
pose considerable challenges. More nuanced classifications of rural space,
people and institutions are needed than the fashionable "Rural Worlds 1, 2
and 3" if these challenges are to be met. Questions of how to treat the
chronically vulnerable (who cannot fully engage in productive activity)
cannot be addressed through this classification, nor does it take account
of how, for instance, labour markets are constructed, what risks to
livelihoods they entail, and how they link among Rural Worlds.



The paper proposes a number of guidelines on how the principles
underpinning a modified SRM approach can be operationalised, viz:



Guideline #1. Identify how far policy at the highest levels (in relation
to macro-economic and fiscal management; trade and investment,
infrastructure, the legal framework...) is cognizant of SP and SRM
requirements, and what scope there is for modifying it in order to
mainstream these considerations.



Guideline #2. Repeat this process within the productive sectors, to
identify within these the types of policy arena likely to impact on the
poor, and how far the tradeoffs within these (typically between growth and
social protection) have been examined to date, and how they can be
adjusted to obtain balances between growth and social protection, which
are favourable to the poor. Within these sectors, identify how far public
expenditure has been substituted by private commercial engagement, what
the implications have been for the balance between SP and growth, and how
imbalances might be redressed



Guideline #3. Identify what measures such as insurance need to be
undertaken to gain win-win outcomes by complementing production-focused
measures



Guideline #4. Identify who from among the poor remain marginal to the
processes outlined in Guidelines 1-3, and identify what can be done for
them by way of direct SP measures



Guideline #5. Identify the major dimensions of risk and vulnerability
within the country(ies) concerned, and how these vary according to such
factors as: agro-ecology; infrastructure; links with market-oriented
infrastructure and institutions; labour markets; the degree of market
segmentation; location, particularly as it relates to market access and
potential natural disasters, and social networks.



Guideline #6. Recognising that SP can be promoted at national, provincial,
community, household and individual levels, identify the main groupings
that require some difference of approach; identify in particular the
differences in vulnerability among, and different types of risk faced by,
for instance, men and women, male and female children, widows, and the
elderly.



Guideline #7. On the basis of a sound understanding of the above, identify
how coherence can best be achieved between domestic and productive spheres
in terms of both SP and livelihood promoting measures.



Guideline #8. Use existing fora of donors and international agencies to
obtain agreement on the principles underpinning greater coherence between
social protection and livelihood promotion.



Guideline #9. Use Poverty Reduction Strategy processes as a means of
discussing and implementing the principles on which these guidelines are
based.



Guideline #10. International agencies, governments and NGOs need to
experiment with new ways of adapting policies in the productive sectors to
be more socially protecting, and of adapting SP policies so that they
support pro-poor growth objectives. They should also experiment with new
forms of public investment, service delivery and multi-agency partnerships
to deliver these new approaches more effectively.



Guideline #11. New knowledge is also needed on how new SP measures impact
on traditional mechanisms, and how they might be modified to build on
these where appropriate.



Guideline #12. Capacity needs to be built among senior officials concerned
both with SP and livelihood promotion so that each appreciates more fully
the perspectives of the other, and takes decisions in a coherent manner.





Background and purpose



Recent interest in how livelihood protection and promotion might better
interface with each other has been driven by:

Ø      Awareness that in many countries some two thirds of the poor are
found in rural areas, and two thirds of these in remote and difficult
areas which are weakly integrated into market-oriented infrastructure and
institutions. Compounding this is an awareness that agricultural growth in
these areas has been weak, and that, increasingly, people are moving out
for part or all of the year to take up work in better integrated rural
areas or in urban centres. In addition to the longstanding shocks and
stresses faced by people in weakly integrated areas, this trend raises new
needs in relation to e.g. family protection during periods of migration.

Ø      On the social protection (SP) side, new conceptualizations that go
beyond "social sectors" (such as health and education) and "social
assistance" (e.g. welfare benefits for the elderly, sick or disabled).
These see social protection both as a "trampoline" capable of helping
those who might (for whatever reason) temporarily drop out of productive
activity to "bounce back", and as a means of support to the critically
vulnerable. The World Bank's Social Risk Management (SRM) framework (World
Bank, 2001) is one of the best-known articulations of this view, and is
gaining interest among donors and governments, but there are questions
over how approaches of this kind can be operationalised, given for
instance the administrative divisions between responsibilities for
protection and promotion.

Ø      An awareness that better joint management of protection and
promotion is likely to be central to the promotion of "pro-poor growth".
To address them is all the more urgent in the context of the high risks
linked to growing commercial (including global) market exposure; reduced
public investment in agriculture; the imperfections in agricultural input
and output markets where privatization has been overhasty, and the
constraints on recurrent budgets that any expansion of SP is likely to
face.

Ø      In areas seriously affected by HIV/AIDS, the need for coherent
responses to both social protection and agriculture-related needs is
particularly pressing.



The purpose of this paper is to generate operational guidelines that may
lead to a more coherent management of social protection and livelihood
promoting interventions for low-income households and individuals whose
livelihoods depend primarily on agriculture. This is seen as a
contribution towards the operationalisation of new approaches towards
social protection, such as the World Bank's SRM Framework, and is
consistent with the need for coherence and practical orientation among
donors and governments in developing poverty reduction strategies, such as
Poverty Reduction Strategy Papers (PRSPs). In pursuit of this purpose, the
paper:

Ø      first, examines definitions of social protection and livelihood
promotion, including the concepts of risk and vulnerability, and their
effects; 

Ø      second, outlines the main features of the SRM framework, and
proposes a number of modifications; 

Ø      third, moves towards operationalising these by examining them
against particular sub-groups of low income people in rural areas,
indicating how particular aspects of the framework can be applied to
these, and how the framework may need to be modified. 

Ø      Finally, it sets out a number of guidelines for operationalising
the SRM framework in the context of a new architecture of aid in which the
search for coherence in approaches to poverty reduction in the context of
PRSPs features prominently.





Social protection and livelihood promotion - defining the scope



Social protection is concerned with reducing both risk and vulnerability.
It comprises:



public interventions which (i) to assist individuals, households and
communities to manage risk better, and/or (ii) which provide support to
the critically vulnerable[1]



What makes current concepts of social protection new is that they
represent a public commitment to reduce risk and vulnerability, different
from the social sectors (such as health and education) and different from
social welfare programmes, since they are concerned at least in part with
the interface between protective measures and engagement by the poor in
productive, growth-oriented processes. Others (Conway and Norton, 2002)
have argued that a further novel feature of social protection is its
concern with provision as a right, and not as paternalistic "handouts" by
the state.

In all events, many of the components of social protection are not new:
informal transfers within households, extended families or communities
have long existed, both to meet crises and to support those chronically
unable (or only partly able) to engage in the productive economy. For the
better off, there has long been the possibility of purchasing insurance in
the commercial market to cover certain types of risk. In some communities,
there are voluntary mechanisms to provide funds to cover "stress" events,
such as death donation societies. More formally, contributory pension
schemes serve much of the same purpose. Many of these are discussed below.
The challenge for SP addressed in this paper is that of bringing these and
new SP measures together within some form of SRM framework so that
interventions geared towards protection and those geared towards
livelihood promotion complement each other, and this should not just be
within the context of a productive sector such as agriculture, but also in
coherence between measures addressed to the domestic sphere and those
addressed to the productive sphere.



Risk is the likelihood of being affected by shocks or stresses. These can
be external to the household (e.g. a natural disaster such as flooding, or
an economic event such as price collapse), or internal, such as the loss
of labour through sickness, injury and death, and the direct financial
costs of these, as well as of other intra-household events such as
marriage or illness among children or the elderly. Individuals or
households likely to be affected particularly adversely by such events are
vulnerable, as a result of e.g. low asset status, low and variable income,
disadvantageous location, a high proportion of dependents in household
composition or weak social networks. There are important gender
differences: certain types of shock or stress (usually,
occupation-related) threaten men more than women, but others (such as
caring for the sick or elderly) impact more on women. Women and children
(in S Asia, typically girl children) are known to suffer more from reduced
food consumption in times of crisis.



Livelihood promotion is concerned with enhancing the range of livelihood
options open to the poor, and making these more accessible to them.
Livelihood promotion has been interpreted primarily in terms of increased
income opportunities, but this needs to be supplemented by measures which
reduce the variance of incomes over time and space. For instance,
agricultural research strategies concerned purely with raising incomes
through increased per hectare crop yields are likely to require additional
inputs of fertilizer and other agrochemicals, which exposes farmers to
higher risk in the event of crop failure. A moderated strategy which
sacrifices some growth in crop yield for greater stability (through e.g.
drought tolerance, and resistance to pests and diseases) is likely both to
increase incomes and reduce their variance. But some (such as Carney (ed)
1998) suggest that livelihoods embrace much more than income, such as
status and "voice" (i.e. the ability to identify needs and articulate them
to investment and service providers). The discussion below will not enter
into these other dimensions of livelihoods in detail, other than to
identify at appropriate points how voice can be strengthened.



The effects of high levels of risk and vulnerability are evident in
several dimensions, and this constitutes the basis for growing concern
among donors and governments. For instance:

Ø      Entrepreneurial shocks and stresses can cause farming to fail,
resulting in indebtedness, loss of productive assets and reduced income
for present and future generations. 

Ø      Domestic shocks and stresses can likewise drive households and
individuals into greater poverty and at the same time impact on
entrepreneurship by causing funds to switch out of enterprise in order to
meet the domestic crisis. This "fungibility" of funds means that domestic
and entrepreneurial risk and vulnerability have to be treated
simultaneously, a central argument in our analysis below. Poorer
households, and women, children and the elderly within them, tend to be
the most vulnerable and have access to fewer instruments to respond to
risk. 

Ø      Perceptions of high entrepreneurial risk can discourage poor
households from taking up new activities, often keeping them in
low-productivity, and low-return but fairly secure livelihood activities.
These might include informal arrangements such as (typically in S Asia)
seeking the protection of a "patron" who will provide credit in times of
need (and thereby provide a degree of social protection) but in return
demand priority access to the household's labour, the sole right to market
its output, and the sole rights to provide seasonal credit. This
"interlocking" of labour, product, input and credit markets makes it
extremely difficult for poor households to take up new economic
opportunities of the kinds that market signals might indicate.



Table 1 provides examples of shocks and stresses according to the scale at
which they occur (viz. micro, meso and macro). It is worth noting that
micro-level shocks and stresses tend to be idiosyncratic - i.e. affecting
individuals and households in a more or less random fashion - whereas at
macro level they tend to be covariate - i.e. a drought or flood will
generate a range of related negative impacts affecting in some way
practically all the households over a wide area. Innovative ways are being
sought of insuring against the latter (Hess, 2003) given that insurance
companies operating on a limited scale are likely to be financially
threatened by the scale of covariate adverse events.



SP covers a potentially wide range of arrangements, which can be grouped
into three broad categories: 



Prevention strategies, which reduce the risk of occurrence of adverse
shocks or stresses. In the agricultural sphere these can include the
breeding of livestock resistant to disease, and of crops resistant to
pests, diseases and drought, or the implementation of soil and water
conservation measures intended to reduce the likelihood of drought,
landslides, erosion, flooding etc. In the domestic sphere they can include
vaccination against illness or disease, improved diet, safer water, and so
on.



Mitigation strategies, which reduce the potential impact of a shock or
stress. These can include portfolio diversification strategies - such as
the management of diverse farming systems combining elements which are not
all subject in the same degree to the same covariate risks (such as
drought or disease); insurance strategies (in both entrepreneurial and
domestic spheres), and hedging against future price fluctuations.



Coping strategies, which relieve the impact once the event has occurred,
such as relief operations in response to natural disasters or civil
disturbances. 



However, SP can also tackle vulnerability as well as risk. It can do so by
enhancing the resource-base of rural households through increased income,
and reduced variance in income, which, among other things will also
translate into a strengthened asset base. It can also seek to (a) improve
the access by poorer households (i.e. the most vulnerable) to information
and to assets which they do not own, including water bodies, forest,
grazing land (b) grant rights to poorer households, help in making them
aware of these rights, enhance their capacity to make claims on the public
sector in line with these rights, and promote stronger responsiveness by
the public sector to such claims, and accountability to the claimants. To
promote particular kinds of microsavings and credit may help in reducing
vulnerability to shocks and stresses sufficiently to prevent the sale or
mortgaging of productive assets such as livestock or land.





The need for a new initiative in Social Risk Management?



In addition to the requirements outlined above, a central perception among
proponents of the World Bank's SRM Framework is that there is a need for a
new initiative for two main sets of reasons. One is that traditional
informal risk management arrangements, such as transfers within extended
families, and intra-community support mechanisms, are breaking down as
population pressure rises and employment patterns become increasingly
casualised and migratory. In addition, new types of risk demand responses
beyond the coping capacity of traditional mechanisms, such as the risks of
greater product price instability driven by globalization, the risks of
product rejection as a result of higher product standards imposed by
supermarkets, the risks that inputs will not arrive, or products not be
marketed as a result of overhasty liberalization. The "rolling back" of
the state has also impacted negatively on its capacity to reduce risk or
vulnerability directly through traditional social protection measures such
as transfers, or to do so indirectly through, for instance, public
agricultural research which develops new crops resistant to pest or
disease attack, or new approaches which allow risk to be spread through
farming systems containing diverse and complementary elements - this is
perhaps especially the case where such services have been privatized and
new commercial research is more driven by "growth" than "growth with
stability".



The main elements of the SRM framework are presented in Box 1[2], and
Table 2 provides examples of types of SRM in both domestic and
entrepreneurial contexts, and across the spectrum of informal, private
commercial and publicly mandated arrangements.



Box 1  The World Bank's Social Risk Management Framework

Social Risk Management repositions the traditional areas of social
protection (labour market intervention, social insurance and social safety
nets) in a framework that includes three strategies to deal with risk
(prevention, mitigation and coping), three levels of formality of risk
management (informal, market-based, publicly-mandated) and many actors
(individuals, households, communities, NGOs, governments at various levels
and international organisations) against the background of asymmetric
information and different types of risk. This expanded view of Social
Protection emphasizes the double role of risk management instruments
protecting basic livelihood as well as promoting risk taking. It focuses
specifically on the poor since they are the most vulnerable to risk and
typically lack appropriate risk management instruments, which constrains
them from engaging in riskier but also higher return activities and hence
gradually moving out of chronic poverty.

Source: adapted from Holzmann and Jørgensen (2000)



The World Bank argues that improved SRM is important in a static sense
since it can contribute to:

Ø      reduced vulnerability; enhanced consumption smoothing; and improved
equity.



And, in a dynamic sense, enhance:

Ø      income and consumption smoothing; the effectiveness of informal
provisions, and the cost-effectiveness of public provision.



Implementation of the SRM is expected to contribute to poverty reduction
by:

Ø      reducing transitory (consumption) poverty; 

Ø      preventing declines into deeper poverty and destitution; and 

Ø      supporting upward trajectories out of poverty through its support
for entrepreneurial risk-taking.



Public (government and donor) support for SRM is justified on the grounds
that it has to substitute for widespread market failure, or get markets
working. This applies to several types of market:

Ø      first, markets for insurance are highly imperfect - knowledge is
often imperfect, information asymmetric, and transaction costs high - so
that many types of risk are in effect uninsurable;

Ø      second, asymmetries in information and power act as barriers to
entry in other markets (for products, labour and credit, for instance);

Ø      third, some are excluded on social, ethnic or religious grounds
from markets which are segmented, and in other cases, the poor attempt to
avoid risk by entering relations with patrons that often result in
interlocked markets. 



The poor will always face difficulties of these kinds in entering markets;
the provision of new forms of social protection will not guarantee that
such barriers can be broken, but may provide a platform so that some, at
least, can enter new markets.





Making the SRM framework operational



The main argument of this paper is that the SRM framework will not
implement itself automatically. It has the potential to make substantial
improvements to the livelihoods of the poor, but involves a number of
potentially complex interactions and complementarities. Questions of how
the SRM framework can be operationalised will require careful
consideration in four dimensions:

Ø      in relation to different categories of poor people; 

Ø      in relation to interactions between productive sectors (where
entrepreneurial activity is focused) and domestic spheres (since funds are
fungible between the two);

Ø      in relation to the interface between protection and promotion
options within the sector; and 

Ø      in relation to location-specific socio-cultural and economic
conditions.





Addressing different categories of poor people



The OECD Povnet Agriculture group has been considering a concept of "Three
Rural Worlds" advanced by the International Institute for Environment and
Development as an aid to understanding who the clients of agricultural
interventions are, and how they might best be reached. 



Basically, the concept postulates:

Ø      A Rural World #1, in which farming is well-established and
well-linked into market-oriented institutions and infrastructure.
Fluctuations in commodity prices as a result of globalization and
liberalization are a major component of entrepreneurial risk in this
context. 

Ø      A Rural World #2, in which farming is less commercialized, and
semi-subsistence, though with some commercial engagement. Links to
market-oriented infrastructure and institutions are less strong, and major
sources of risk include not only price fluctuations, but also
unreliability of input supply and marketing, and climatic shocks. 

Ø      A Rural World #3. which is near-subsistence farming, often in more
remote and agro-ecologically more difficult areas, so that major sources
of risk are climate- rather than market-related. 



Whilst this schema provides a crude but appealing categorization of
production spheres and their relations with markets, it has a number of
shortcomings as an aid to identifying how SRM might be operationalised.
One is that it does not help in conceptualizing how those chronically
unable (or only partly able) to engage in productive activity should be
catered for, and whether this will differ across production spheres. The
same applies to those mainly dependent on hiring out their labour, and an
added problem here is that, in some contexts labour is seasonally migrant,
and links both among rural worlds (and so partially confounds this schema)
and between them and urban areas. Perhaps the major contribution this
schema makes is that it suggests a spectrum in which those in RW #1 are
concerned mainly with entrepreneurial risk, and rely mainly on private
sector mechanisms for this, and so the main policy imperative is to get
insurance and related markets to work better, whilst those at the opposite
extreme (RW #3) need protection mainly against weather-based risk and
against domestic shocks and stresses, and that combinations of informal
and publicly-mandated approaches lend themselves best to achieving this.
More nuanced policy analysis requires a breakdown between domestic and
productive spheres, which is considered in the next section, and between
different categories of labour, to which we turn later.





Addressing interactions between domestic and productive spheres



Funds are fungible, so that shocks and stresses in the domestic sphere may
cause diversion of funds from the productive, and vice versa. This argues
strongly for treating the two spheres jointly and not separately. However,
in practice this has rarely happened, and the factors that have prevented
it need to be addressed if the future prospects for joint treatment are to
be better. These include: 

Ø      the fact that they are generally mandated to different government
departments, and to different offices within donor agencies; 

Ø      the limited resources in most developing country governments for
support to households through e.g. transfers; the pressure from the IMF
and other agencies to keep down recurrent budgets;

Ø      the weak political power of those unable to engage in the
productive economy, so that no electoral advantage is perceived in
supporting them; and 

Ø      the lack of interest among donors in even experimenting with
innovative ways of making SP transfers (such as social pension payments)
given their perception that these are an open-ended commitment into which
they do not wish to be drawn.



As Tables 2 and 3 suggests, there can be several ways of providing SP to
the domestic sphere. These may include support for micro-savings and
credit schemes (possibly on the Grameen Bank model), the provision of
micro-insurance against sickness, injury and death, and regular payments
such as social pensions to the elderly and widows, allowances to orphans
or the disabled, school fee allowances, school feeding schemes etc. To
transfer funds to those unable to engage in the productive economy is
regarded by some as little more than a "handout". However, whilst such
transfers may be too small to allow a build-up of assets, they do at least
allow the recipients to engage in the economy as consumers, and may allow
existing informal intra-household resource transfers to be switched into
agriculture. Further, in some settings (e.g. S Africa - Devereux (2003))
there is evidence that part of social pensions paid to the elderly are
invested in productive activity.



One of the benefits of a closer coherence between interventions in
domestic and productive spheres is the prospect of avoiding negatives,
such as are caused, for instance, when poorly-timed food aid disrupts
local agricultural markets.





Identifying synergies between social protection and livelihood promotion



The World Bank's presentation of its SRM framework is presented largely as
a "win-win" scenario, in which SP protects people against sliding into
poverty, and at the same time allows increased entrepreneurial risk-taking
by providing social protection. In principle this can generate synergies
in the narrowly defined sense of making the whole greater than the sum of
its parts. Table 2 provides examples such as migration, holding multiple
jobs, and insurances where this can occur. 



But many of these interventions are conceived as a "trampoline" which
allow those producers who face temporary setbacks to "bounce back" into
the productive economy. There are very few efforts to bring those largely
outside the productive economy into it - along something of a trajectory
from situations in which they mainly rely on social protection, to one in
which they benefit more from livelihood promotion. This kind of trajectory
represents synergy of a different kind. One such effort is the work done
by the Bangladesh Rural Advancement Committee (BRAC) in its Income
Generation for Vulnerable Group Development (IGVGD) programme (Matin and
Hulme, 2003). 



BRAC has faced a number of field-level implementation constraints in its
IGVGD programme. To keep costs down, it is obviously desirable for
community development workers (who would normally handle social
protection) to cover interaction with the poor over both livelihood
protecting and promoting issues. However, they may lack the skills or
inclination to become advisers in micro-enterprise or agriculture. The
same applies to agriculture advisers - they may be a poor second-best when
it comes to providing assessments and advice in relation to SP. If this
applies to the well-motivated staff of a dynamic NGO, it is likely to
apply even more to public sector staff in social welfare or agriculture
departments.





Addressing trade-offs within SP and within agriculture



Not all possibilities will be "win-win". In a productive sector such as
agriculture, policy decisions supporting high levels of growth may
generate high levels of risk, and some growth may have to be sacrificed in
order to reduce risk. Decisions over how certain SP measures are designed
and implemented can impact differently on a productive sector such as
agriculture.



For instance, where transfers to the poor form part of the SP portfolio,
the trade-offs between transfers in cash and in kind need to be assessed.
Food transfers (as an example of the latter) tend to be politically
popular, but are costly to administer and may suppress demand in local
food markets. Cash transfers require robust transfer mechanisms if they
are not to be diverted, but the advent of computerization may assist in
automating payments. Cash transfers may boost demand for agricultural
products in local markets.



On the agriculture side, trade-offs are found in many areas, including the
decisions regarding priorities for agricultural technology: a policy which
"goes for growth" may generate high-yielding, but also high-risk crop
varieties. One which is more concerned with risk management may trade off
some growth and so generate varieties which are resistant to pests and
diseases, drought avoiding etc.



There is substantial unexploited scope for introducing the perspectives of
the one into the design and implementation of the other, i.e. for giving
aspects of SP more of a growth-promoting dimension, and for designing
agriculture initiatives in ways aiming to reduce risk and vulnerability.



Areas in which this might be done include (Farrington et al, 2004a;
2004b):

Ø      On the social protection side, SP can be growth promoting where,
for instance, it stimulates thrift and credit schemes, creates physical
assets through employment schemes, and promotes personal insurance, but
(cash) transfer payments can also be indirectly growth promoting.

Ø      On the agriculture side, several types of agricultural strategy can
both promote growth and reduce risk, including revisions to legislation
and regulation, investments in infrastructure and soil and water
conservation, innovative types of insurance, and appropriately focused
provision of services, including research and extension.



Addressing location-specific conditions



Risk and vulnerability factors in both productive and domestic spheres
will clearly vary according to a wide range of conditions. It is not
possible to consider the full range of these here, but a number of
illustrations can be given:



Agro-ecological conditions will influence the "riskiness" of production,
as will the extent to which infrastructure (such as irrigation) has been
constructed to counteract these. Market-related risks will impact
differentially according to the types of crop typically grown in different
areas, the extent and quality of links with international markets, the
international market conditions for such commodities and the extent to
which these penetrate major consumer markets in a given country. Labour
markets may be characterized by different levels of casualisation,
different types and levels of migration, different pressures on wages
coming from rural non-farm or urban labour markets, and different types
and degrees of segmentation. Factors of this kind will determine the types
of SP needed (such as employment creation schemes) and by whom. Location
will also determine the likelihood of events such as flooding, which will
impact on both production and domestic spheres. Differences in social
network will determine the extent to which informal protection mechanisms
can be called upon during crisis.



Even these few examples suggest that policies seeking greater coherence
between livelihood protection and promotion will have to be based on a
clear understanding of contextual difference in spheres such as:

Ø      agro-ecology;

Ø      infrastructure;

Ø      links with market-oriented infrastructure and institutions;

Ø      the nature of labour markets;

Ø      the degree of market segmentation;

Ø      location, for instance in relation to market access and such shocks
as potential natural disasters;

Ø      social networks.





Guidelines for making SRM operational



Mainstreaming SP and SRM



The major difficulty with SRM is that social protection can be provided at
many different levels of intervention and in many different ways. At one
extreme, policies to achieve macro-economic stability or greater
transparency in fiscal administration or improved transport and
communication infrastructure can in some measure, and to some groups of
people, help to provide social protection. In some contexts, policies to
reinforce the rule of law might be an important step towards social
protection. At the opposite extreme, specific kinds of targeted transfer
might be needed in order to meet the SP needs of very poor individuals and
households. In between, lie a very wide range of options and requirements.
The scope of this paper is sectoral. For this reason, it has not
considered these higher-level policies, but that is not to say that they
are unimportant - certainly they need to be addressed by others concerned
with macro-level economic management. 



The overwhelming reality is that ministries and departments concerned with
the productive sectors have far more resources than those concerned with,
for instance, social welfare, and, given the pressure to keep recurrent
expenditure down, this appears unlikely to change. A logical conclusion
therefore is that the policy areas covered by, for instance, agriculture
departments, should be investigated with two things in mind: one is to
review the scope of policies areas mandated to them, and to consider
whether these might be broadened to include others that offering more
scope for SP - promoting new forms of insurance (against crop failure,
livestock death, price fluctuations etc) provides one example; the other
is to consider trade-offs within existing policy areas, for instance how
more social protection might be gained within them at the expense perhaps
of a little less growth. 



To ask then who is left out from such efforts to enhance SP from within
the productive sectors leads to two further sets of conclusions: one
concerns the other contributions that "freestanding" SP can make to the
productive sectors by way of, for instance, personal insurance and credit
schemes of various kinds. The other concerns the ways in which SP can
address domestic requirements and yet still impact on the productive
sectors through consumption effects (as with, for instance, cash
transfers) or through allowing existing informal transfers to be diverted
into the productive economy.



The first guidelines therefore concern the "mainstreaming" of SP and SRM:



Guideline #1. Identify how far policy at the highest levels (in relation
to macro-economic and fiscal management; trade and investment, the legal
framework...) is cognizant of the SP and SRM requirements, and what scope
there is for modifying it in order to mainstream these considerations.



Guideline #2. Repeat this process within the productive sectors, to
identify within these the types of policy arena likely to impact on the
poor, and how far the tradeoffs within these (typically between growth and
social protection) have been examined to date, and how they can be
adjusted to obtain better balances between growth and social protection
favourable to the poor. Within these sectors, identify how far public
expenditure has been substituted by private commercial engagement, what
the implications have been for the balance between SP and growth, and how
imbalances might be redressed



Guideline #3. Identify what measures such as insurance need to be
undertaken to gain win-win outcomes by complementing production focused
measures



Guideline #4. Identify who from among the poor remain marginal to these
processes, and identify what can be done for them by way of direct SP
measures



A further set of guidelines is concerned with coherence of approach
between domestic and production spheres, and with the need to recognize
contextual differences.



Guideline #5. Identify the major dimensions of risk and vulnerability
within the country(ies) concerned, and how these vary according to such
factors as: agro-ecology; infrastructure; links with market-oriented
infrastructure and institutions; labour markets; the degree of market
segmentation; location, particularly as it relates to market access and
potential natural disasters, and social networks.



Guideline #6. Recognising that SP can be promoted at national, provincial,
community, household and individual levels, identify the main groupings
that require some difference of approach; identify in particular the
differences in vulnerability among, and different types of risk faced by,
for instance, men and women, male and female children, widows, and the
elderly.



Guideline #7. On the basis of a sound understanding of the above, identify
how coherence can best be achieved between domestic and productive spheres
in terms of both SP and livelihood promoting measures.



There are then important questions of how all of the above can best be
achieved. Agreement on the guidelines is first required among donors and
other international agencies, and the OECD Povnet provides a starting
point. At country level, there is already a mechanism seeking coherence in
approaches to poverty reduction, in the form of Poverty Reduction Strategy
Papers and the associated committees, and these provide an appropriate
locus for discussing and implementing the principles on which these
guidelines are based. 



Guideline #8. Use existing fora of donors and international agencies to
obtain agreement on the principles underpinning greater coherence between
social protection and livelihood promotion.



Guideline #9. Use Poverty Reduction Strategy processes as a means of
discussing and implementing the principles on which these guidelines are
based.



What is clear from several assessments of PRSPs, however, is that, whilst
they make strong statements of intent on poverty reduction, they are less
clear on the ways in which public investment, service delivery and
public-private partnerships will change in order to deliver these
intentions. This calls for experimentation with new approaches in these
areas, and a coordinated lesson-learning approach



Guideline #10. International agencies, governments and NGOs need to
experiment with new ways of adapting policies in the productive sectors to
be more socially protecting, and of adapting SP policies so that they
support pro-poor growth objectives. They should also experiment with new
forms of public investment, service delivery and multi-agency partnerships
to deliver these new approaches more effectively.



Guideline #11. New knowledge is also needed on how new SP measures impact
on traditional mechanisms, and how they might be modified to build on
these where appropriate.



Guideline #12. Capacity needs to be built among senior officials concerned
both with SP and livelihood promotion so that each appreciates more fully
the perspectives of the other, and takes decisions in a coherent manner.






Table 1            Sources and forms of shocks and stresses, by scale



Micro (idiosyncratic)

Meso

Macro (co-variant)

Natural



Rainfall

Landslide

Volcanic eruption

Earthquake

Floods

Drought

Strong winds

Health

Illness

Injury 

Disability

Epidemic



Life-cycle

Birth

Old-age

Death





Social

Crime

Domestic violence

Terrorism

Gangs

Civil strife

War

Economic

Unemployment 

Harvest failure

Ethnic discrimination

Output collapse

Business failure

Riots

BoP, financial or currency collapse

Technology or ToT shocks



Resettlement

Political





Potential default on social prog.

Environmental



Pollution

Deforestation

Nuclear disaster



Source: adapted from Holzmann and Jorgensen (2000)




Table 2            Matrix of social risk management (examples)

Arrangements/ strategies

Informal/personal

Formal/financial market-based

Formal/publicly-mandated/ provided

Risk reduction

Les risky production

Migration



Labour standards

VET

Labour market policies

Disability policies

Risk mitigation







Portfolio

Multiple jobs

Investment in human, physical and real assets

Investments in multiple financial assets

Multi-pillar pension systems

Social funds

Insurance

Marriage/family

Community arrangements

Share tenancy

Tied labour

Old-age annuities

Disability/accident

Mandated/provided for employment, old-age, disability, survivorship,
sickness, etc.

Hedging

Extended family

Some labour contracts





Risk coping

Selling of physical and real assets

Borrowing from neighbours

Intra-community transfers/charity

Sending children to work

Selling of financial assets

Borrowing from banks

Transfers/social assistance

Subsidies

Public works

Source: adapted from Holzmann and Jorgensen (2000)






Table 3            Managing shocks and stresses in relation to the
agriculture sector

Types of rural household



Domestic

Production-related

Established farmers

Types of shock and stress

Illness

Injury 

Disability

Death

Costs of weddings and other rituals

Collapse in prices resulting from globalisation

Extreme weather events (drought, hail, flooding)

Degradation of soil, water and other NR

Inadequate access to input, finance and output markets owing in part to
failed liberalisation

Types of response

Promote private sector insurance schemes

Promote private sector input supply and marketing, and insurance schemes
(which may require public start-up and regulatory controls); develop new
types of crop insurance and price hedging (Hess, 2003). Public/private
partnerships to control erosion and soil

Marginal farmers

Types of shock and stress

Illness

Injury 

Disability

Death

Costs of weddings and other rituals

Extreme weather events (drought, hail, flooding)

Degradation of soil, water and other NR

Inadequate access to input, finance and output markets owing in part to
failed liberalisation

(Possibly) collapse in prices resulting from globalisation

Types of response

Promote micro-savings, micro-credit, micro-insurance

Promotion of private sector inputs supply and marketing may have to be
accompanied by measures to reduce market segmentation and interlocking;

Insurance and savings schemes may require a strong public or
community-based leadership

Labourers

Types of shock and stress

Illness

Injury 

Disability

Death

Costs of weddings and other rituals

Loss of rural employment opportunities and/or reduction in real wages
attributable to the above

Loss of opportunities for seasonal/permanent migration attributable to
same or other causes

Types of response

Promote micro-savings, micro-credit, micro-insurance.

Investigate possibilities of occupation-linked insurance and pensions

Public works programmes

Support for seasonal migration through improved information,
accommodation, education provision for children, easier means of making
remittances etc

Those unable to engage fully in productive activity

Types of shock and stress

Illness

Injury 

Disability

Death

Costs of weddings and other rituals

Reduction in informal intra-household transfers resulting from above
shocks/stresses in agriculture

Reduction in opportunities for gathering fodder/fuel from commons owning
to NR degradation

Types of response

Social pensions for the elderly, widows and disabled; school feeding
programmes; promotion of infant health and nutrition; distribution of free
or subsidised food 

Social pensions for the elderly, widows and disabled; school feeding
programmes; promotion of infant health and nutrition; distribution of free
or subsidised food 

Schemes to rehabilitate the commons and ensure equitable access




References



Carney, D. (ed). (1998) Sustainable rural livelihoods: What contribution
can we make? London: DFID.

Conway, T. and Norton, A. (2002) 'Nets, Ropes, Ladders and Trampolines:
The Place of Social Protection within Current Debates on Poverty
Reduction', Development Policy Review 20 (5): 533-40. London: Overseas
Development Institute.

Devereux, S. (2003) 'Policy Options for Increasing the Contribution of
Social Protection to Food Security', Second Draft Forum for Food Security
in Southern Africa, London: Overseas Development Institute, accessed
October 2003 at:
http://www.odi.org.uk/Food-Security-Forum/docs/SocProtection_theme4.pdf

Farrington, J., Slater, R. and Holmes, R. (2004a) 'Social Protection and
Pro-poor Agricultural Growth: What Scope for Synergies?' Natural Resource
Perspectives 91, London: Overseas Development Institute.

Farrington, J., Slater, R. and Holmes, R. (2004b) 'The Search for
Synergies between Social Protection and Livelihood Promotion: the
Agriculture Case', Draft Working Paper. London: Overseas Development
Institute.

Hess, U. (2003) 'Innovative Financial Services for India: Monsoon-indexed
Lending and Insurance for Smallholders', Agriculture and Rural Development
Working Paper 9, Washington DC: World Bank.

Holzmann, R. and Jørgensen, S. (2000) 'Social Risk Management: A New
Conceptual Framework for Social Protection and Beyond', Social Protection
Discussion Paper 0006, Washington DC: World Bank.

Matin, I. and Hulme, D. (2003) 'Programs for the Poorest: Learning from
the IGVGD Programme in Bangladesh', World Development 31 (3): 647-65.

World Bank (2001) Social Protection Sector Strategy: From Safety Net to
Springboard, Washington DC: OUP for the World Bank.




________________________________

[1] Adapted from World Bank (2001)

[2] Although the SRM stresses both the "trampoline" function of SP in
preventing people from dropping out of productive activity, or bouncing
them back into it again, and that of protecting the "chronically
vulnerable" who are unable fully to engage in productive activity, in
reality, much of the concern hitherto has been with the former, not the
latter.



=============================================================
To send a reply to this message that goes to all list members,
make sure that you send your reply to <address removed>

To unsubscribe from this list, send an email to "<address removed>", with the 
message body:

unsubscribe risk-and-vulnerability <your-email-address>


Please visit dfid-agriculture-consultation.nri.org.