Household livelihood strategies, environmental dependency and poverty: the case of the Vietnam rural area

Abstract

This study explores households’ dependency on environmental income for households that engage in different livelihood strategies. This study also investigates the impact of environmental income on rural household poverty and inequality, and identifies factors that determine the choice of rural households’ livelihood strategies in rural communities in Vietnam. A cluster analysis identifies five livelihood strategies: wage dependency; non-farm, non-wage dependency; mixed-income dependency; transfer dependency; and environment dependency. Households engaging in various livelihood strategies differ in their asset endowments. Households engaging in environmental dependency strategy are more likely to have abundant labour, land and physical capital. However, those following more remunerative livelihood strategies, such as mixed-income and non-farm, non-wage dependencies, are more likely to be endowed in financial and social assets. Environmental income accounts for 40.65% of total household income, of which 36.89% comes from agricultural activities and 3.77% comes from common property resources extraction. In addition, the study finds that environmentally dependent households are the most reliant on environmental resources in both relative and absolute terms. Environmental income provides 82.48% of total income to households in this strategy group, which is worth about 11.8 million VND per capita per year. This amount is significantly higher than that of the other strategy groups. The findings confirm the contribution of environmental income to income inequality and poverty reduction. In terms of income inequality, on average, the inclusion of environmental income reduces the Gini coefficient by more than 20%, from 0.598 to 0.475. With respect to rural poverty, environmental income reduces the poverty headcount index, poverty gap and poverty severity by 28.0%, 22.5% and 18.7%, respectively. This study also provides evidence that households’ asset endowments and contextual factors have an important influence on the choice of household livelihood strategy. Family size, agricultural land owned, livestock herds, ownership of productive equipment and distance to all-weather roads all increase the likelihood that a household follows the environment dependency strategy. However, the educational level of the household head, social networks and credit loan accessibility has negative influences on the likelihood that a household is highly dependent on environmental resources. These characteristics constrain households from shifting to strategies that are more remunerative. Other variables also have mixed effects on the choice of household livelihood strategy. In terms of policy implications, the results of this study suggest that policies should focus on enhancing the productivity of agricultural land plots owned by households rather than increasing households’ access to common property resources. In addition, effective pro-poor policies should be targeted towards assisting the poor to shift to higher-return activities, such as wage employment and/or non-wage, non-farm businesses by investing in diploma education in rural areas, improving the road infrastructure and relaxing credit constraints in rural areas.