Rural people in Bangladesh generate income through various means. Poor or rich, they have assets. Even for the poorest of the poor having no asset, health could be an asset. Five types of capital or assets can be identified in rural context: natural, physical, financial, human and social. Assets are both created and destroyed as a result of trends, shocks and seasonality in terms of vulnerability. Vulnerable people always tend to be reliant on natural resources no matter what they value in terms of its sustainability. To them, the present is of more serious concern with regard to livelihoods than the future.
Land, water, and biotic resources (crop varieties and beneficial organism) are important natural capital which people can draw on for agricultural production. Physical capital, such as agricultural and non-agricultural machinery and equipment or livestock holdings, are formed from utilisation of surplus agricultural production over what is required for the basic needs of a family. It is, of course, true that a single physical asset can generate multiple benefits. For example, access to lands may lead to access to financial capital or, livestock may generate social capital for owners and emerge as a source of productive physical capital. It may be noted here that the government's policy to invest in basic infrastructure or technology generation or local institutions could help arrest encroachment on natural resource base and thus contribute to the creation of assets. Availability apart, the determinant of access to assets is ownership rights, markets and institutions regulating access to common resources.
Take the case of natural capital. Natural capital is a term used for natural resource stocks from which products and services (e.g. nutrient cycling and erosion protection) are derived for livelihoods. Natural capital includes land, forests, marine and wild resources, crop varieties and beneficial organisms that help sustain natural biological control. Access to natural capital is very important to those who derive all or part of their livelihoods from resource-based activities such as farming, fishing, forest extraction and mining. The survival of human kind would be at a stake without key environmental services and the food produced from natural capital. Within the sustainable livelihood framework, the relationship between natural capital and the vulnerability context is very important. This is the source of livelihood for the 'have-nots' which could also seriously jeopardise livelihoods of the 'haves' since the latter depends on natural capital. For example, if for the sake of livelihood, the poor encroach upon trees and forestry, use too much fertiliser and pesticides for raising the yield of crops, the consequent costs could be borne by the rich in terms of degradation of soil fertility and other environmental hazards. Therefore, support to preservation of biodiversity (through technology and direct action) and the provision of services/inputs emerge as paramount policy palliatives.
Next comes human capital. It represents skills, knowledge, health etc. that enable people to reap a better harvest from their hard labour. This is the building block or means of achieving livelihood outcomes. Good health is the most important human capital for the poor. The accumulation of human capital for accessing information and living an enlightened life can also be an end in itself.
Another kind of asset is social capital. There are many connotations of this but, suffice it to say, it implies social resources on which people draw in pursuance of their livelihoods. The main pillars of social capital are network and connectedness, formalised group setting and trust, reciprocity and exchange.
Infrastructures such as roads, rails and telecommunication are essential ingredients for the integration of remote areas where many poor people live. The presence of infrastructures, such as roads and telephones, cuts into the crisis in two distinct ways: first, it enhances mobility of the people in terms of migration and second, increases malleability along the ladder of the opportunity set. This results from better-informed environment. For example, when people tend to know more about market prices, they can access more job opportunities or make supply of input and output smooth. But the demand for infrastructures should come from the users. While good infrastructure is a factor, the livelihood approach also takes into consideration deployment of transports to help the poor.
Financial capital - savings, inventories, access to credit - goes to connote financial resources that are needed (and people try to take hold of) for livelihood objectives. Financial resources are not an end in themselves, but a means to an end e.g. livelihood. Financial capital can be converted into other types of capital in varying degrees depending on transforming structure and process. Second, it can be considered as an instrument for achieving direct livelihood outcomes e.g. purchase of food for reducing food insecurity. And, rightly or wrongly, it can also be transformed into political influence to enable people to participate actively in policy- formulating agencies. The question of institutional sustainability is important here. Unless people believe that institutions like NGOs have come to stay or they would charge relatively low rate of interest, sustainability could remain a suspect.
The presence of capital of various types could recoil if proper organisations, policies and legislation that shape livelihoods do not emerge concomitantly. In fact, the transforming structure and process goes a long way to determine 'inclusive development'. Values, mindsets, class structure, rules and regulations and their applications, tolerance of corrupt practices etc. largely determine who are excluded and who are included in development activities initiated and implemented by the state machinery.
The framework of livelihoods so presented serves useful purposes. In particular, it provides important issues and interconnections between issues. It also calls for attention to the core concerns. Livelihoods strategies should be set in terms of the framework to achieve livelihood outcomes. The outcomes are:
Improved food security, and
More sustainable use of natural resources.
The writer is a former Professor of Jahangirnaagr University.