Rural Poverty, Vulnerability, and

Social Protection ((DEVRU 811))

Seminar on
Understanding Risk

May
y 6,, 2010
Content of the Presentation
1.
1 What are vulnerabilities?
2. What are hazards?
3
3. What are risks?
4. How can households mitigate against risks?
5. What are the local means of protecting
households?

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 1 What
1. Wh t are Vulnerabilities?
V l biliti ?
Definition:
† Vulnerability- exposition, susceptibility, being open to,
defencelessness.
† Vulnerability-
V l bili a situation
i i when
h people
l experience
i high
hi h risk
i k
of events that have adverse impacts on their livelihood,
and that their ability to deal with such risky events when
they occur is impaired. [Devereux, 2002; Ellis, 2006b]
† In the context of poverty and destitution:
destitution
1. It is a sense of insecurity, of potential harm people must feel
wary of.
2. It is the danger that a socially unacceptable level of
wellbeing may materialize. [Dercon, 2005]

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 1 What are Vulnerabilities? (cont’d)
1.
Reasons:
† Depletion of key assets;
† pp ;
Lack of opportunities;
† Shorter intervals between shocks;
† Persistence of poverty.
“With forward looking anti-
anti-poverty intervention, there is a
need to go beyond the study of who is currently poor or
not and to an assessment of households
not, households’ vulnerability
to poverty.
poverty.”
[Shubham, Chaudhuri, 2003]

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 2 What are Hazards?
2.
† Definition:
„ The ability of an activity or a substance to cause
harm. [www.risk-ed.org]
„ Hazards may cause injury to people or damage
property and the environment.
„ Shocks such as flood,
flood drought,
drought market disdis-function
function,
conflict… that affect the livelihood of people.
† Rating:
„ Hazards such as environmental hazards are rated
according to the amount of harm they can do.
„ Low, medium, and high.
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 3 What
3. Wh t are Risks?
Ri k ?
† Definition:
„ It is the probability of hazard occurring in a given
future time period.
„ A risk
i k is
i a shock
h k that
h isi not certain
i in
i a given
i period,
i d
but is possibility with a numerical probability. [S. Sinha
and M. Lipton, 1999]
„ According to S. Dercon (2007):
1. Risks and shocks have long-run implications for
growth and p
g poverty[hence
y[ important
p in p
policy
y
formulation]
2. Risk implies a possible ‘fear’ of bad outcomes.
Shocks are realizations of risk.

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 3 What are Risks? (cont’d)
3.
According to Shubham Chaudhuri (2003)
„ The measure of wellbeing is dependent on whether
there is risk or not:
† If risks [harvests may fail, food prices may rise, the main
income earner of the household may become ill ]were absent
(and the future were certain),there would be no distinction
b t
between ex-ante
t ((vulnerability)
l bilit ) and
d ex-postt (poverty)
( t )
measures of well-being.

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4. How can households mitigate
against risks?
† Risky events are exogenous to households.
households
† Households use risk strategies.
† The strategies: The Ex-ante and Ex-post ones
1. Ex-ante strategies:
- Are preparations before the risks occur;
- Are strategies used to prevent [ if not mitigate or
reduce] risks;
- Include:
- Specialization in low risk activities;
- Asset and production diversification;
- Migration patterns; and
- Marriage

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4. How can households mitigate
against risks? (cont’d)
2 Ex-post strategies:
2.
- Are strategies to cope with the consequences of risk
once shocks occur.
- A meantt to
Are t reduce
d impacts
i t off shocks.
h k
- Include:
- Informal credit;
- Savings (grain storage, livestock);
- Informal insurance arrangements (mutual support;
insurance groups); and
- Family Labour adjustments (including child labour)
*But each has got its own short coming; and most of
the time the returns are too low.

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 5. What are the local means of
protecting households?
† In Ethiopian context,
context we have a number of social
protection mechanisms:
1. Formal social protection mechanisms:
1. The Safety Net Program
2. Subsidies in the form of agricultural extension programs,
selected
se ected seeds, and
a d fertilizers;
e t e s;
3. Small scale enterprises; and
4. Micro financing.
2 Informal social protection mechanisms:
2.
1. Idir;
2. Equb; and
3. Debo.
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 5. What are the local means of
protecting households? (cont’d)
The Safety Net Programs
† They are non-contributory (contributory in some cases)
transfer programs targeted to the poor and vulnerable.
† They are part of the poverty reduction strategy.
† They have roles in development policy in:
1.
1 Redistributing income to the poorest group;
2. Enabling households make better investment in their future;
3. Helping households manage risks; and
4. Allowing governments make choice that support efficiency
and growth.

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 5. What are the local means of
protecting households? (cont’d)
Idir
Idi
† This is a community program meant for reaching out
to households during their adverse/good times.
times
† It is formed among a group of people with common
interest [some times religion/locality based].
† It is run based on rules and regulations set by the
members of the program.
† It is a contributory program.
program

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 Thank You!

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