Livelihoods: Concepts

What is a livelihood?

A livelihood is a combination of the resources used and the activities undertaken by a household for the material provisioning of its members.

Resources consist of individual skills and abilities (human capital), land, savings and equipment (natural, financial and physical capital, respectively) and formal support groups or informal networks that assist in the activities being undertaken (social capital).

Livelihood Assets:

These are the assets on which livelihoods are built. They can be divided into five core categories (types of capital):

People’s choice of livelihood strategies, as well as the degree of influence they have over policy, institutions and processes, depends partly upon the nature and mix of the assets they have available to them.  Some combination of these assets is required by people to improve their quality of life significantly on a sustainable basis.

1- Human Capital


Defined as the skills, knowledge, capacity to work, and good health that together enable people to pursue different livelihood strategies and achieve their livelihood outcomes.

2- Natural Capital


Defined as natural resource stocks (trees, land, clean air, coastal resources, etc.) upon which people rely. Benefits of these stocks are both direct and indirect.

3- Financial Capital

Defined within the Sustainable Livelihoods framework as the financial resources people use to achieve their livelihood objectives.

4- Social Capital

Defined as the formal and informal social relationships (or social resources) from which various opportunities and benefits can be drawn by people in their pursuit of livelihoods.
These social resources are developed through investment in:

5- Physical Capital

Defined as physical goods and facilities, both public and private, that support livelihoods.

Public physical capital, often called infrastructure, includes:

Private physical capital includes:

Asset Status

Asset Status is an individual’s or group’s access to livelihood assets changes over time.
A change in asset status may involve:

Vulnerability Context

Vulnerability Context refers to the shocks, seasonality, and trends that affect people’s livelihoods. It focuses on factors that are not controllable by local people in the immediate or medium-term. Vulnerability or livelihood insecurity resulting from these factors is a constant reality for many poor people.

Shocks

Shocks are a key element in the vulnerability context. Shocks are sudden events that have a significant impact – usually negative – on livelihoods. They are irregular and vary in intensity and include events such as natural disasters, civil conflict, losing one’s job, a collapse in crop prices for farmers, etc.

Categories of shocks:

Shocks may be linked to trends. For example, some changes that appear as trends at a national or even regional level (such as increased infection rate for diseases such as AIDS and malaria) can impact upon a household or individual as severe shocks (i.e., death in the family).

Seasonality

Seasonality is another key element in the vulnerability context. Seasonality refers to seasonal changes that affect assets, activities, prices, production, health, and employment opportunities. Poor households and individuals are often especially vulnerable to seasonal changes in the value and productivity of natural capital (because they live close to nature) and human capital (because they have relatively little of it). The poor are often more vulnerable to the adverse effects of seasonality than wealthier groups.

Trends

Trends are the last key element in the vulnerability context. Trends are long-term forces that have either a positive or a negative effect on livelihoods and involve changes that take place over a longer period of time than is the case with changes brought about by shocks or seasonality. Examples:

Livelihood Strategies

The range and combination of activities and choices that people make to achieve their livelihood goals. Livelihood strategies include:

 
All livelihood content was adapted from Department of International Development, Sustainable Livelihoods Guidance Sheets. 
Available at http://www.livelihoods.org.