A commercial-based approach to sustainable livelihoods : Review and syntheses

JOURNAL OF SCIENCE, Hue University, Vol. 70, No 1 (2012) pp. 207-216<br /> <br /> A COMMERCIAL-BASED APPROACH TO SUSTAINABLE LIVELIHOODS:<br /> REVIEW AND SYNTHESES<br /> Truong Tan Quan1, Nguyen Van Toan2<br /> 1<br /> <br /> College of Economics, Hue University<br /> 2<br /> <br /> Hue University<br /> <br /> Abstract. Sustainable livelihood framework has been developed and used by<br /> several authors, organizations and studies. The purpose of the paper is to explore<br /> missing factors in the livelihood sustainable framework in previous studies. The<br /> result of reviewing and synthesis shows that the role of market has unliklely been<br /> exploited in the framework whereas most livelihoods is currently depending on the<br /> market system. Therefore, the market role has been integrated in the framework<br /> when traditional sustainable livelihood framework and supply chains analysis have<br /> been combined.<br /> <br /> 1. Introduction<br /> A considerable number of studies, projects and papers have applied a sustainable<br /> livelihood framework in their works to investigate the livelihood of people from<br /> households to community levels. However, it is likely that the role of markets is<br /> neglected in these applications, so intervention is not very effective and efficient yet.<br /> The purpose of this paper is to review and synthesize previous studies and then develop<br /> the framework that will be used to investigate household livelihoods in market-based<br /> production. The paper is structured into five sections. Following this introduction is the<br /> second section which discusses the conventional sustainable livelihoods framework and<br /> its relevance to household behavior. The third section discusses the linkage between<br /> livelihoods and markets in a market focused system. A commercial-based sustainable<br /> livelihood framework is then developed by integration of traditional sustainable<br /> livelihoods theory and supply chains analysis. Finally, some conclusions are drawn.<br /> 2. Sustainable livelihoods approach<br /> 2.1. Main features of conventional sustainable livelihoods<br /> Sustainable livelihood (SL) concepts have been widely used by many<br /> researchers, organizations and agencies after being first introduced at the World<br /> Commission on Environment and Development in 1987. At first, the thinking on<br /> sustainable development was mainly focused on the macro level, and then it developed<br /> to address the wellbeing of individuals and households (Solesbury, 2003). Subsequently,<br /> 207<br /> <br /> 208<br /> <br /> A commercial-based approach to sustainable livelihoods…<br /> <br /> many organizations and agencies such as the International Institute for Environment and<br /> Development (IIED), United Nations Development Program (UNDP), Oxfam, Care,<br /> International Institute of Sustainable Development (IISD), Department of International<br /> Development (DFID), Institute of Development Studies (IDS) and some other agencies<br /> have adopted the concepts to meet their goals, foci, and priorities (Carney, 2002;<br /> Solesbury, 2003). Accordingly, the SL approach has become diverse in terms of both<br /> users and uses.<br /> Although the concepts of SL have been adapted considerably by users, there are<br /> common components of the SL framework that are widely recognized and accepted.<br /> These components are described within DFID’s sustainable livelihood framework as<br /> follows (Fig. 1).<br /> Capital assets and capacity to access these resources has a major impact on<br /> sustainable livelihoods. These assets include human, natural, financial, physical and<br /> social capital (Carney, 1998, Soussan et al, 2001; Hussein, 2002; Sida, 2003; Odero,<br /> 2003).<br /> According to DFID (2001), these assets can be defined as follows. Human<br /> capital is the skills, knowledge, capacity to work and good health that together enable<br /> people to pursue different livelihood strategies and achieve their livelihood outcomes.<br /> Natural capital is the bio-physical elements such as water, air, soils, sunshine,<br /> woodland, minerals. It reflects the natural resource stock. Financial capital is defined<br /> as the financial resources that people use to achieve their livelihood objectives. Physical<br /> capital is the basic infrastructure and physical goods that support livelihoods. Social<br /> capital is the formal and informal social relationships (or social resources) from which<br /> various opportunities and benefits can be drawn by people in their pursuit of<br /> livelihoods.<br /> The second component of the framework is the transforming structures and<br /> processes. This component includes institutions, organizations, policies, and legislation<br /> that determine capacity to access capital, the terms of exchange between assets, and the<br /> returns on different livelihood strategies (DFID, 2001). Accordingly, insights into<br /> sustainability at different levels (micro, meso and macro), together with the constraints<br /> and restrictions imposed on different livelihood strategies, can be obtained through<br /> understanding these structures and processes. The understanding also clarifies<br /> opportunities to improve livelihoods of people through transforming the structures and<br /> processes.<br /> The third important component of the livelihood framework is the livelihood<br /> outcome. It is defined as the goal or the result of livelihood strategies (DFID, 2001).<br /> The outcome is generally to improve the wellbeing of people but its emphases or focus<br /> will be diverse, including both physical and emotional aspects such as poverty reduction,<br /> <br /> TRUONG TAN QUAN, NGUYEN VAN TOAN<br /> <br /> 209<br /> <br /> increased income and sustainable use of natural resources.<br /> <br /> Fig. 1. DFID’s sustainable livelihood framework<br /> (Source: DFID (2001), Sida (2003)).<br /> <br /> In order to achieve the livelihood outcome, the livelihoods have been built from<br /> a range of choices, based on their assets, transforming structures and processes (DFID,<br /> 2001; Soussan et al, 2001; Cahn, 2002). Livelihood strategies are the combination of<br /> activities and choices that people make to achieve their livelihood goals or the set of<br /> decisions to best employ the assets available. This is a continuous process but there are<br /> always key decision-making points that impact on the success or failure of the strategy<br /> (Soussan et al, 2001). These points can include crop selection, selling time, involvement<br /> in a new activity, changing to other activities, and adjusting the scale of activities.<br /> According to Scoones (1998), there are three main livelihood strategies for rural<br /> households: agricultural intensification or extensification, livelihood diversification and<br /> migration. An alternative perspective known as Khanya’s framework focuses on the<br /> relationship with natural resources and categorises the three main livelihood strategies<br /> as natural resource based, non-natural resource based and migration (Hussein, 2002).<br /> Based on other criteria, in particular the relationship to external threats, Rennie and<br /> Singh (1996), and Soussan et al (2001) divide strategies into two categories of adaptive<br /> (long term change in behavior patterns) and coping (short term responses to immediate<br /> shocks and stresses).<br /> Clearly, there is no unique livelihood strategy but rather a range of livelihood<br /> strategies. Therefore, the important issue is how to select or introduce the strategy that is<br /> most relevant to the situation of particular households and which maximizes the utility<br /> of both the individual and society.<br /> The final major component of the sustainable livelihood framework is the<br /> <br /> 210<br /> <br /> A commercial-based approach to sustainable livelihoods…<br /> <br /> vulnerability context. This reflects the shocks, trends and seasonality. These factors can<br /> not controlled by people in the immediate or medium terms (DFID, 2001). Therefore,<br /> analysis of sustainable livelihoods not only focuses on how people use assets to achieve<br /> their goals, but addresses the vulnerability context that they may face, and the means by<br /> which people can cope and recover from shocks and stresses (Chambers and Conway,<br /> 1992; Soussan et al, 2001; Cahn, 2002).<br /> These core components work together, and interact with each other within a<br /> dynamic livelihood system (DFID, 2001; Soussan et al, 2001; Carney, 2002). As a result,<br /> the issues can be viewed holistically.<br /> The SL approach is people-centred, participatory and operates at multi levels<br /> across sectors. Given its emphasis on sustainability, it is useful in addressing poverty<br /> reduction, rural development, responses to emergencies, and community based planning<br /> where the issues or problems are usually multi-dimensional (Hussein, 2002; Cahn,<br /> 2002; Carney, 2002). Also, according to a range of authors, the sustainable livelihood<br /> approach, by focusing and building on strengths that people have rather than on what<br /> they do not have, is forward-looking and positive (Norton and Foster, 2001; Hussein,<br /> 2002; Cahn, 2002).<br /> There is also a range of concerns that have been raised relating to the sustainable<br /> livelihoods approach and its application. The first concern is that the framework does<br /> not focus sufficiently on the relationships between the factors (Cahn, 2002). Therefore,<br /> the importance of one or more factors can be underplayed. Linked to this, Carney<br /> (2002) claims that because of existing viewpoints and user experiences, unfamiliar<br /> aspects may be omitted, despite these aspects being crucial to livelihood. In addition,<br /> although the SL approach was developed to be used holistically across sectors, the<br /> reality is that most governmental organizations and agencies are operated and funded in<br /> relation to a specific sector. Consequently, the application of this framework can be very<br /> difficult in reality (Carney, 1999; Cahn, 2002).<br /> Another concern is that although the framework is intended to put people at the<br /> centre, some components such as political capital, gender, and a range of other power<br /> issues, are not emphasized or considered sufficiently (Hussein, 2002). Similarly, Carney<br /> (2002) claims that insufficient attention is given to the need to increase the power and<br /> rights of the poor.<br /> Another important concern is that markets, economic issues and the private<br /> sector are given insufficient attention. This concern comes from the fact that although<br /> the framework encourages researchers to understand the complexity of livelihoods and<br /> to take local contextual factors into account, its use as an analysis framework has<br /> largely been undertaken by non-economist, social scientists (Carney, 2002).<br /> <br /> TRUONG TAN QUAN, NGUYEN VAN TOAN<br /> <br /> 211<br /> <br /> 2.2. Adoption and application of the sustainable livelihoods approach<br /> Based on the main framework as described, the SL approach has been widely<br /> applied and adopted by governmental organizations, non–governmental organisations,<br /> researchers and practitioners. The most intensive and frequent use of the approach has<br /> been in relation to poverty reduction and rural development. The applications include<br /> project design, implementation, monitoring and evaluation at both macro and micro<br /> levels. Organisations to have used the SL approach include DFID, the World Bank, the<br /> IMF, FAO, International Fund for Agriculture and Development (IFAD), Save the<br /> Children (UK), Society for International Development (SID), European Commission<br /> (EC), Swedish International Development Cooperation Agency (SIDA), UNDP, CARE<br /> and Oxfam. Reports on these applications have been widely published (Turton, 2000;<br /> DFID, 2001; Hussein, 2002; Carney, 2002; Sida, 2003).<br /> Besides poverty reduction purposes, the SL approach has been widely applied to<br /> different sectors like natural resource management and fishing development (Alliison<br /> and Ellis, 2001; Allison and Horemans, 2006) or tourism development and livelihoods<br /> (Simpson, 2007; Tao and Wall, 2009). Market factors have begun to be exploited for<br /> livelihoods improvement, particularly in tourism studies, but only relating to particular<br /> aspects rather than the overall market system.<br /> 3. Market, livelihoods and linkages<br /> Hussein (2002, p. 36) refers to Oxfam’s belief that “improved access and or<br /> power in markets [is] critical to the livelihood of the poor producers and improve[ment<br /> in] wages and employment conditions for women”. However, it seems that the linkages<br /> between markets and livelihoods have not been widely explored. Important issues<br /> include both input and output markets, and both commodity and non commodity<br /> products.<br /> According to Dorward and Kydd (2005), there are three main exchange<br /> mechanisms. These are gift exchange, hierarchical exchanges and market exchange.<br /> These mechanisms may exist together in a livelihood system.<br /> The gift exchange is based on shared values and reciprocity. Hierarchical<br /> exchange is based on allocation of resources through command and control. In contrast,<br /> market exchange is based on voluntary participation and a ‘win win’ relationship which<br /> is precise in terms of quantity, quality, space and time. This market relationship<br /> normally has a supporting requirement of a monetary currency and an enforceable legal<br /> system.<br /> Globalisation and trade liberalisation are the dominant tendencies across most<br /> countries of the world. As part of this trend, commercialisation of agriculture is also<br /> occurring in most countries, although the rate of change varies across regions and<br /> <br />