Livelihood vulnerability in northern Laos

external pageThis workcall_made analyzes the effect of cash crop production on livelihood vulnerability, which we define in terms of the probability distribution of household income. We use a Bayesian network to estimate this distribution, conditional on biophysical (e.g., yield), household (e.g., agricultural land), and commodity price variables. By expressing all variables, including stressors such as price volatility and yield variability, as probability distributions, our model explicitly reflects exposure and sensitivity to shocks. Results show the effects of household land portfolio, including diversification between cash crops and between cash and food crops, on household income and income variability. The explicit and graphical representation of income distribution curves makes it straightforward to visualize income inequalities, e.g., between household types or case study areas. This approach can be used to identify the household types that have the highest potential to benefit from agricultural commercialization and can be used to help design policy instruments that can act as safety nets—for example, affordable and state-supported healthcare, education, insurance, and other contingency measures such as low-interest loans that do not use agricultural land as collateral would leave smallholder farmers less exposed to market and idiosyncratic shocks.