Risk Response and Significance of Risk in Poverty Studies

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Amjad Nazeer Poors Risk Response and Risk Studies 1

THE POOR HOUSEHOLDS RESPONSE TO RISK AND THE SIGNIFICANCE OF

RISK ELEMENT IN POVERTY STUDIES

Amjad Nazeer1

(June 2004)

Along with death and taxes, risk is one of the certainties of life2

Every day, I am afraid of the next3

Introduction:

Life is a struggle through natural and socio-economic risks. But it is the poor who are

affected most seriously by the risk, of whatever sort it is. It eats up their belongings,

disrupts their livelihoods and at times threatens their life too. Although risk, shocks and

uncertainties share conceptual boundaries but they are not synonymous. They can be

dealt together in poverty studies but in this article, I am confining my explanation to risk

and adversaries of risk.

I am going to unpack the issue in two parts: First is the brief description of different kinds

of risks and their hazardous impact on the poor. Second is the significance of risk in

poverty studies. Considering risk as a crucial element of poverty studies is my key

argument as leaving it unaddressed might cause a major deficit in the subject. In the

second part, coping strategies of the poor households in coping and combating risks are

illustrated. My approach of dealing with the issue is relatively different from the

conventional pattern of listing down the stereotypes of livelihood diversification. I will

rather explore various approaches and attitudes of the poor in responding risks, their

innovativeness and ingenuity in dealing with risks and pressures on their livelihood and

sources of livelihood.

1 The author is a human rights activist and works for an international NGO in Pakistan.2 Source: A statement by MacCrimmon and Wehrung 1986, as quoted in Anderson R. (2001)3 Source: A poor ma from Russia , Voices of the poor , World Bank


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I: SIGNIFICANCE OF RISK-ISSUE IN POVERTY STUDIES

Risk is a major or minor hazardous event, likely to happen without any reliable prediction

(Lipton and Sinha 1999: 5; Anderson 1999: 3). It is ambient in the poor rural economies

that not only decreases the existing capacities of the poor rather factors in regenerating

poverty (Fafchamps 1999: 4) and pushing the poor down to further risks. All risks are

fluctuations that damage the life systems of the poor. They push the non-poor in to

poverty and intensify poverty of the poor. Risks inequalize4the inter- and intra-household

distribution of resources and when occur are difficult to handle (Lipton and Sinha 1999:

4-5).

The poor are highly susceptible to risks due to lack of: assets, productive resources,

stocks and stores, exchange entitlements and claims, savings or access to services and

credit. Their social support mechanism, owing to their less reciprocal capability, happens

to be poor and sources of information remain limited, weakening their capacity to absorb

shocks5. In acute circumstances, the only asset, they have, is their body to invest in the

labour market (Chambers, 1983: 113-117; Fafchamps 1999: 6; Swift 1989: 9-11). Along

with affecting their material well being, risk puts them under psychological stress and

diminishes their utility and ritual pleasures, which may result in social exclusion

(Fafchamps 1999: 3-4) and indignity.

Risks can be of large- i.e aggregate or small- i.e idiosyncratic scale with variant

frequency and force. Aggregate risks affect the whole community simultaneously like

famine, drought, cyclone, floods, epidemic, pests/rats-attack, market fluctuation, crop

failure and warfare etc. While idiosyncratic risks affect a particular household or

individual like illness, death, disability, accident, theft or any other physical or economic

loss. The span of risks could be longer or shorter but the repercussions of risks keep

unfolding long after they occur. Some of them are recurrent, others are once off, and so

are the peoples responses (Davies, 1996; Fafchamps 1999).

4 The same argument is debated for diversification (in response to risk). Some forms of diversifications

have equalizing impact but most of them favour the well off (Adams and He 1995 as cited in Ellis 1998).5 If the risk is sudden and intensive, it may be termed as shock. Moreover Fafchamps is using this word

interchangeably with risk (see Fafchamps, 1999, Rural poverty, risk and development).


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Severe risks not only harm livelihoods but also erode peoples entitlements to necessary

commodities and services. People can suffer from famine not because of production

failure but because of entitlement exchange failure (say labour or cattle price does not

equate food prices). Hence, during drought or famine, the poor starve or remain uncured

even in the availability of food or drugs in the market, because of their depleted rights to

these commodities and vital services (Sen, A. 1981 as cited in Swift: 1989: 9).

Agriculture, in which the poor predominately operate in, is a fragile and risk-prone sector.

A plethora of risks and uncertainties surrounds the livelihood of rural poor (Robinson and

Barry 1987; Fleisher 1990; Anderson and Dillon, 1992 as cited in Anderson 1999: 1).

Moreover mechanization, agri-inputs and now genetically modified organisms (GMOs)

expose them to new risks and fears. Without knowing the nature of risks and traditional

coping strategies, it is difficult for NGOs and international development agencies to

evolve risk management tools and make successful interventions (Anderson 1999: 1-2).

For development planners and practitioners, it is crucial to understand seasonal risk

coping strategies of poor households to devise initiatives corresponding their rationality

and preferences. It needs to be insured that other institutions are providing necessary

inputs and services along with risk-support facilities. Otherwise either the poor avoid

participating in any development programmes fearing increased liabilities or fall back in

their effort to cope-with food deficit or insecurity (Nabarro et al. 1989: 70-73).

Risk studies suggest that expansion of opportunities and removal of constraints to

diversification and provision of opportunities of education, credit, non-farm enterprise,

and infrastructure are the most reliable policy implications to help the risk affected poor

(Painter et al 1994; Jazairy et al 1992; Ravallion 1995; Dercon and Krishnon; 1996 as

cited in Ellis 1998: 25-30)

It is essential to understand, how poor people themselves see risk and vulnerability andthink of the ways to reduce them. To them, risk is not limited to income or consumption

loss as it is conventionally perceived to be. It can be of personal liberty, self-esteem,

mobility, social interaction and so on. There is a whole range of intangible risks that

needs to be taken in to account for appropriate policy interventions (Chambers 1989: 4,

Beck 1989: 27-28).


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Thus risk is one of the generic features of poverty. It is not possible to understand

poverty without understanding causes and consequences of risk. Studying risk provides

us with insights about poverty and vulnerability. Risk mitigation, risk-management and

risk-reduction is inevitable to reduce poverty. Despite having elaborate mechanisms

(explained below), poor households are not capable to eliminate vulnerability unless

rendering them extensive support. Governments and development agencies need to

develop socio-economic safety nets and instruments to eliminate risks from the lives of

the poor (World Bank 2000/01: 151-158).

II: THE POOR HOUSEHOLDS COPING STRATEGIES TO RISK

Poor households adopt number of strategies in response to risk. These strategies are

diverse, complicated and context specific. It depends on demography and ecology of the

area and the nature and degree of risk they are confronting with. Different households

respond differently to the same risk depending on their resources, assets, income and

skills they posses. Furthermore, ethnicity, cast, gender, social support systems, cultural

values, available opportunities and some other variables also shape their responses.

(Adams and He 1995; Davies and Hossain 1997; Hart 1994; Reardon et al. 1992 as

cited in Ellis 1998: 5-13).

We can distinguish between risk-management and risk-coping attitude of the poor.

Chronic poor look for survival strategies in order to stabilize their food and income.

Relatively better off are usuallyproactive and engage in cumulative activities to improve

their condition and lift them out of the risk. The former ones are ex-post options or

coping strategies taken up in desperation while the latter are ex-ante measures or risk

management methods adopted by choice in their struggle to reduce vulnerability

(Alderman and Paxon 1992; Carter 1997; World Bank 1990 as cited in Ellis 1998:7-11)

Cutting on basic needs like food, clothing, medicine and education are commonly

adopted measure in precarious situations. Others would find off-farm or non-farm labour.

Some of them would put additional members to work, sell home-made crafts or assets or

draw on savings or seek loan or sell livestock or migrate or mortgage/sell land (if

available). It must be pointed out that risk coping decisions that poor households make


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are logical, sequential and carefully selected, not haphazard ones. For instance

mortgaging/selling of the productive resources, say land or cattle and/or migration would

be the last resorts opted for (Taal 1989: 18-20, Nabaro et al. 1989: 68-69; Rocha 1999:

13-24).

Example: Households Responses to Economic Crisis in Indonesia

(Since 1997 to 1998 the poor households resorted to the following practices in order to

cope with the rising prices and declining purchasing power)

Coping Strategies Rural h.hs Urban h.hs

Doing additional job 49% 37%

Asking children to work 18% 22%

Asking other h.h members to work 19% 14%

Reducing the quantity and quality of food 45% 50%

Withdrawing children from school 3.3% 2.3%

Reducing medical expenses 67% 73%

Withdrawing savings 10% 18%

Borrowing from others 31% 40%

Source: Descriptive information derived from Rocha, (1999) and concisely tabulated by this

author.

Mixed cropping as practiced by Dobo village of Sudan is one way of food insurance (Tall

1989: 19). Similarly intercropping is an on-farm diversification to cope with insecurity of

food. Richards, P. (1986) has meticulously studied the seasonal hunger coping

strategies of Mogbuama people of Sierra Leone. Mogbuama subsistence rice farmers

are likely to run out of food before the next year harvest usually due to earlier rainfall or

sickness. The smallest households and those involved in litigation are the most common

victims. Cassava, maize, egusi or some vegetables are cultivated immediately after

clearing and before planting rice for the next year. These crops work as hungerbreaker

for poor households and normally women take that initiative (Ibid: 116-119).

Coping strategy, as argued by Davies, S. (1996: 45-59) is a complicated phenomenon. It

depends whether the risk is structuralorproximate in an area. One households coping

strategy can be another households livelihood and one times livelihood can be another


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times coping strategy. People facing with periodical food-shortage adapt means to cope

with hungry season. In a persisting risk environment coping strategy turns into

adaptability. Hence coping is a short-term response while adaptation reflects a

permanent change in livelihood behaviour. Adaptability is actually a shift in moral

economy, which occurs when risk becomes chronic.

The landless poor also draw on common property resource (CPR) to meet day-to-day

food stress or scarcity. Women and particularly children are known to collect food grains

or gather wild plants, fruits and leaves to appease their hunger even at the cost of their

health.

Case Study: Fatu, 55 years old woman lives in village Kilimahewa (Tanzania), has three

daughters, all married. She married three times. Her first husband divorced her, second

was imprisoned for theft and third died after long illness. Her third husband left her

impoverished, spending all their savings on his treatment. She kept taking care of her

own mother till her death. She did not inherit any land from her parents. Currently she

receives gifts from her daughters and neighbours; otherwise her support networks are

very little.

She, sometimes, goes for day laboring (construction), which she does not want to. Her

other source of livelihood is selling mingoko, a wild root crop, which she is doing for last

two years. She is discontented with this un-profiteering activity but continues to dot it

rather than offering herself most often for day labor. Mingoko is an ordinary crop, which

is eaten as a snack or mixed with cassava to make a meal. The work itself is tough. Fatu

and other women leave early in the morning and reach the forest after four hours walk.

Having some rest they dig the roots with hoe for four to five hours. Lions inhabit the

forest too. Women make fire and stay their overnight. On second day they leave for the

village. Before selling, they boil and clean the roots. The selling takes no time but the

whole effort is worth shs 700-1000 only.

Fatu is deprived of any respect what her age, kinship and religion might have offered

her. During her third marriage she was able to partake in communal activities, what she

has dropped now. She can hardly pay the most pressing market-place fee. She has lost

whole cultural capital and is striving to cope with her marginal position.

Source: Extracted from Seppala, P. (1996) and abridged by the author.


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Children are reported to open rat holes to glean food (Sengupta 1987, Cain 1977 as

cited in Beck 1989: 25). Fuel requirements are fulfilled by collecting cow dung, twigs and

dry leaves. Poor households change dietary habits and food preparation methods under

stress. Eating broken rice grain, drinking boiled-rice-water, having food left over by the

well off and eating fatter (to fill more) than thinner variety of food and even spacing food

or fasting are quite a few examples. Share rearing of cattle is also a customary means of

getting productive animal/s in poorest villages (Beck 1989: 23-27).

Authors Attempt to See Households Response Mechanism to Risk

Conclusions:

Risk is part of human ecology. The poor are the worst victims of risk because they live in

isolated, remote and risk prone areas. Unavailability of infrastructure and government

services and lack of opportunities exacerbate the effects of risks. Risk ultimately affects

RiskAffectd hh

Loss of honour

Loss of Cons.

Loss of Income

Extra Labour

CPRs

Safety Nets

Entitlements

Prod. Assets


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Lipton, M., Sinha, S. et al. (October 1999) Damaging Fluctuations, Risk and Poverty: A Review: Background

paper for the World Development Report 2000/20001. Poverty Research Unit at Sussex (PRUS),

www.worldbank.org/poverty/wdrpoverty/background/ sinhalipton.pdf, Washington D.C: World Bank, (18

March 2002)

Nabarro, David, et al (April 1989) How households cope in the hills of Nepal: Can development initiatives

help? IDS Bulletin Vol.20, No.2, pp. 68-74, Institute of Development Studies, Publication unit, Sussex.

Reardon, Thomas (1997) Using evidence of household income diversification to inform study of the rural

non-farm labour market in Africa, World Development, Vol.25, No.5, pp 735-747, Elsevier Science Limited,

Great Britain.

Richards, Paul (1986), Coping with hunger: Hazard and experiment in an African rice farming system, The

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Rocha, G. Mercedes (2001) Private adjustments: Household responses to the erosion of work, Edited by

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Conference Paper Series, UNDP.

http://.undp.org/seped/publications/conf_pub.htm(17 March 2002)

Seppala, Pekka (1996) The politics of economic diversification: Reconceptualizing the rural sector in South-

east Tanzania, Development and Change, Vol.27, pp.557-577, Institute of Social Studies, Published by

Blackwell Publishers, Oxford, UK.

Swift, Jeremy (1989) Why are rural people vulnerable to famine? IDS Bulletin Vol.20, No.2, pp. 8-15,

Institute of Development Studies, Publication unit, Sussex.

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IDS Bulletin Vol.20, No.2, pp. 68-74, Institute of Development Studies, Publication unit, Sussex.

World Development Report (2000/2001) Attacking poverty, World Bank (2000), Oxford university press
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Risk Response and Significance of Risk in Poverty Studies

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