Diversification as Part of a CSA Strategy: The Cases of Zambia and Malawi

Abstract

Climate variability, associated with farm-income variability, is recognized as one of the main drivers of livelihood diversification strategies in developing countries. In this chapter, we present a synthesis of two comprehensive studies from Zambia and Malawi on the drivers of diversification and its impacts on selected welfare outcomes with a specific attention to climatic variables and institutions. We use geo-referenced farm-household-level data merged with data on historical rainfall and temperature as well as with administrative data on relevant institutions. The two case studies demonstrate that diversification is clearly an adaptation response, as long term trends in climatic shocks have a significant effect on livelihood diversification, albeit with different implications. Whereas the long term variation in growing period rainfall is associated with increased crop, labour and income diversification in Malawi, it is only associated with increased livestock diversification in Zambia. With regard to institutions, we find that access to extension agents positively and significantly correlates with crop diversification in both countries, underlining the role of extension in promoting more resilient farming systems in rural Zambia and Malawi. Fertilizer subsidies are among the most important agricultural policies in both countries, where they significantly affect incentives for income diversification – though in opposing ways – providing important policy implications. The two case studies document distinct ways in which incentives for livelihood diversification (measured along different dimensions) are shaped by increased variability in rainfall and rural institutions. The results also demonstrate that diversification can be an effective adaptation response and the risk-return trade-offs are not as pronounced as might be expected.