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RISK AND VULNERABILITY How can DFID help to tackle risk and vulnerability factors that prevent poor people from engaging and investing in agriculture? Moderator?s final summary ? 1 June 2004. 1. Definitions Risk is the likelihood of occurrence of a particular and potentially adverse shock or stress (such as a drought or flood). Risk prevention or mitigation would therefore be done at the broad level of, for instance, breeding drought- resistant crops, or setting up large-scale irrigation systems. Vulnerability is the degree of exposure of individual households or individuals to shocks and stresses, and their ability to prevent, mitigate or cope with the event. Vulnerability reduction would therefore be done at the level of one or a group of households ? by increasing their asset base, increasing their ability to access irrigation or new varieties, and so on. But some shocks and stresses may be related to status in some way, such as the particular vulnerabilities faced by adolescent girls, the elderly, minorities, HIV/AIDS sufferers, and so on ? in which case the appropriate response is likely to be in higher-level policies directed towards these groups. 2. Understanding better who the vulnerable are Several discussants stressed the contribution that participatory vulnerability assessments can make to understanding which communities, sub-groups, households or individuals are vulnerable, why, and what can be done about it. Some saw a rights-based approach as an essential weapon in the struggle to ensure that the poor not only have access to resources, but also the power to use them to meet their requirements. At a different level, the right of women to equal treatment was also emphasized. Several saw these three dimensions: participatory assessment, prevention of elite takeover, and promotion of rights and gender equality as principal platforms for action by donors such as DFID. Others saw the need for donors to support better (i.e. more scientific) assessments of the risk attributable to e.g. natural events such as drought, flooding and so on. Underpinning much of the discussion was a view that power relations worked against the poor, and that their capacity to identify their own requirements, address them where possible from their own resources, and make demands on government where appropriate would have to be strengthened (see below). 3. Mainstreaming risk and vulnerability concerns into policy and planning The background document for this discussion group argued that a primary requirement was for governments to incorporate risk and vulnerability-reducing measures into their planning. The argument was given, for instance, that the imperatives to increase farm revenues (usually based on increased yields) tended to dominate agricultural policy, losing sight of the need to reduce the variance of revenue. Reduced variance might be associated with, for instance, slightly less intensive production strategies (so that some yield is traded off against stability ? a notion which, at least implicitly, seems to have caught the attention of several contributors to the forum), and/or with such traditional practices as mixed cropping, intercropping, relay cropping, mixed crop/livestock/tree systems, and so on. At a higher level, the background paper argued that even policy at higher levels than the agriculture sector could, if managed properly, be risk-reducing. Thus, policies in favour of one or other rate of interest, or foreign exchange rate, could be more or less risk-reducing for low-income farmers, depending on local circumstances. One powerful argument raised in the e-discussion is that these arguments should be extended to an even higher level ? namely that relating to international trade. Internationally marketed commodities face long-term international decline ? but also medium-term price swings (as, for instance, Ethiopia experienced with coffee, its most important export, the revenue from which fell from $420M in 1998 to $175M in 2001, almost entirely as a result of price swings). Two possibilities were aired to deal with this situation: one was compensatory finance mechanisms, the other being agreements among producers to restrict supply. In each case, more nuanced approaches in both these possibilities would be needed than in the past. A third possibility ? of reviving buffer stock mechanisms ? would also help to deal with very short term supply fluctuations. Little prospect of success was held out for the types of ?hedging? operations being tested by the World Bank. One (albeit perhaps cynical) view of these was that they were likely to do little more than generate work for stockbrokers. Several contributors argued that pressures emanating from Economic Reform Programmes towards greater reliance on trade exacerbated the impact of these price fluctuations (and no- one dissented from this view). One related question was how some of the advantages of now defunct parastatals could be re-captured without reintroducing also the negative factors associated with them. One suggestion here was that commercial banks might be able to take on some of the role of parastatals providing that other risk- reducing measures could be pursued, such as the granting of title to land so that it could be offered as collateral against loans or bank guarantees. One view echoed in several of the contributions was that there is much that can be done within productive sector policies and procedures to reduce risk and vulnerability. By the same token, there is much that can be done within social sector policies (focusing on the reduction of risk and vulnerability) which in turn can promote production. 4. Strengthening people?s asset base The vulnerability levels of individuals or households depend heavily on the type and volume of assets they own (or can access). The Sustainable Livelihoods framework sets out broad categories of assets, but much needs to be learned about the most appropriate types and management practices for assets particularly relevant to the poor because of the can be liquidated in ?bite? sizes (such as chickens) to meet expenditure needs as they arise. Also, some assets (such as on-farm trees) might appear vulnerability-reducing, but regulations governing e.g. felling, may need to be reformed before these realize their full potential. Some discussants mentioned individual title to land in this context, and one contribution highlighted how corporate land title permitted borrowing which revived some of the tea industry in Bangladesh, but few ventured into the newer arenas relating to land, such as the opportunities for improving leasehold markets, and for making inheritance arrangements more gender balanced. 5. Transfers, insurances etc There was broad agreement that more needed to be done in relation to these. One correspondent was optimistic about engaging the private sector to deliver insurances of various kinds (possibly subsidized, in the first instance). Discussions on transfers largely focused on food entitlements. In some ways, this was the least complete part of the discussion: to mainstream risk and uncertainty in policy processes is essential, but only part of the necessary response. Transfers can be made in cash or kind, and either against local contributions (e.g. via food for work) or without any counterpart contribution. These modalities have strengths and weaknesses which need to be matched to local circumstances. There are also trade-offs within broad types of transfer. Thus, the simpler the decision-rule over who is entitled to what, the stronger the prospects for developing elements of citizenship (capacity to make demands and insist on accountability of providers), but the greater the potential wastage in terms of errors of inclusion or exclusion. Also, the more sophisticated the decision rule, the more precise is (in principle) the targeting, but the greater the scope for (often corrupt) discretion by local officials. 6. ?Sustainable agriculture? versus livelihood diversification as risk reduction mechanisms One issue on which contributors? views differed was the role in enhancing production and reducing risk and vulnerability of ?sustainable agriculture and NR management? often linked with low external inputs and high levels of indigenous knowledge, versus ?engagement with the market?. The latter is associated with livelihood diversification and embraces not only in situ forms of diversification, but also diversification through permanent or seasonal migration, daily commuting, etc. Clearly, the which of these is preferable over the other will depend largely on local conditions, but in contexts where urban sectors are growing more rapidly than rural (as in much of Asia) and are generating work for e.g. construction labour, where transport links have improved, and where there is some prospect of breaking out of traditional restrictions (as associated with the caste system) then it is not uncommon to note a preference for migration or commuting. Evidence from central India suggests that the commons accounted for some 25% of the income of poorer rural households 3 decades ago, against well under 10% now. This may be partly attributable to pressure on the commons (degradation, encroachment) but is undoubtedly also attributable in part to the improved opportunities on offer elsewhere. These changes have important implications not only for the management of risk and vulnerability, but also more widely for agricultural policy where farming is left in the hands of women or the elderly. 7. Area-based differentiation Several contributors explicitly distinguished between those areas well-integrated into market-oriented institutions and infrastructure, and those weakly-integrated. For the latter areas, several saw the need to strengthen community capacity to identify their own requirements, address them where possible from their own resources, and make demands on government. A central question here is how formal institutions (including government) can be transformed in order to support empowerment among disadvantaged groups. Some saw the role of donors as potentially influential here ? in working with government to support local capacity to take decisions, strengthen ownership and demand accountability, in providing access to external technical knowledge and organizational knowhow, in minimizing the prospects of elite capture, and in supporting the collection, dissemination and discussion of data, at both outcome and process levels, on the projects and programmes in which they have been involved. One contributor highlighted how donor engagement had particularly helped in strengthening women?s community-based organizations. Another contributor, building on the strongly/weakly integrated dichotomy, made the general point that ?territorial? approaches had much to recommend them as a means of promoting coherence among interventions, and promoting interaction among public and private sectors. The pendulum swung against integrated rural development projects some years ago on account of their high cost, overambitious agendas, and tendency to run in parallel with the public sector rather than in ways integrated with it. This was further reinforced by purist donor views to the effect that ?if it is subsidized, it is unacceptable?. However, views such as this do not reflect domestic practice in many donor counties, where investment incentives are widely used as a means of attracting commercial companies into more remote areas. There are therefore few grounds for imposing them on developing countries. 8. Roles for DFID A number of roles for DFID have been identified in the discussions and in moderator?s summaries. These are at times explicit and at times more implicit. They include: i. Efforts to stabilise short/medium-term commodity price fluctuations in international markets ii. Efforts to mainstream risk and vulnerability considerations into national policymaking at macroeconomic and sectoral levels, and to have social protection planning specifically take into account potential impacts on production. iii. The development and promotion of innovative models for personal, crop and asset insurance iv. The development of transfer schemes (in cash or kind) that impact on the productive economy either directly or (through those unable to engage fully in the productive economy) indirectly v. Efforts to support more scientific assessment of risks based in natural phenomena (especially weather events) vi. Support for rights-based approaches in respect of access to and power over resources, entitlements to food, and protection from hazard, access to safety nets and social protection, and support especially for the more vulnerable rights-holders. vii. Support for participatory vulnerability analysis, and identification of critical interactions with other rights and vulnerabilities for example in relation to education, HIV/AIDS, and conflict. viii. Support for change in attitudes, beliefs and behaviours from local to international policy arenas, which lead to gender based discrimination and power inequality between women and men. ix. Support for capacity building among local community organisations to strengthen them in articulating and addressing their own needs, and resisting potential elite takeover. x. Greater emphasis on sustainable agriculture practices and on how they can contribute to reducing food poverty, improving water retention and the level of the water table, reduce soil erosion, and prevent the loss of diversity through the use of locally adapted landraces and varieties. xi. Collaboration with other large, international donors and apply pressure on public sectors to develop coherent pro-poor policy and intervention strategies, and achieve adequate staffing and operational capacity, plus accountability. xii. Support to the public sector in reaching the objectives of the previous point, including formal and informal training for public staff, and the re-engineering of public extension services. xiii. Funding for and dissemination of serious studies revealing the negative impact of the North´s agricultural subsidies and trade policy on the rural livelihoods in the South. xiv. Finance for learning processes (methods, instruments, information) among development agencies to improve pro-rural poor interventions; these processes can be facilitated by international research organizations. xv. Support for livelihood diversification, possibly through business development services, through links with the private commercial sector, and possibly with an emphasis on appropriate services for identifying market opportunities, and stimulating the formation of small-scale farmer business associations. xvi. Additional support to the Fair Trade movement to increase its share in world trade. John Farrington 2 June 2004 ============================================================= 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>
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