Sustainable Livelihoods: Capital Assets

Introduction

If you were a rich farmer with lots of land, plenty of money and only a few farm hands, how would you get rid of the weeds in your fields? Chances are you would buy some pesticides and get spraying. But if you were a poor farmer with a tiny plot and a large family to feed, you would most likely get out your hoe and start weeding. The point is not that one method is better than the other. Just that each draws on different assets to solve a problem. The one forks out cash; the other uses the poor person’s major asset - labour.

The difference illustrates in the simplest possible terms how people draw on, and try to accumulate, different forms of assets - or "capital". There are different sorts of assets or capital: they can be categorised as financial, physical, social, human and natural. People draw on them in different ways to carry on their lives, to make profits in the good times and to preserve themselves and their families in the bad times.

However, people don’t all have the same level of access to the same assets. They may have problems getting access to important kinds of assets which are vital to their livelihoods – land, for example, the most basic form of natural capital. And even if they have access to all the assets they need, they may not be able to utilize them fully.

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Assets In the Field

In many of the projects and case studies we have looked at on previous pages, the story is about gaining access to assets and making the best use of them, about drawing on those assets in times of need or change, about and accumulating them as a source of wealth and a buttress against disaster, and also about how outside agencies such as governments can help or hinder this activity.

In our first study we looked at sacred groves in Ghana. These are surviving fragments of a once great communal asset -- the West African rainforest. The scarcity of the remaining forest today gives it even greater value as a natural asset. How have these fragments of valuable forest escaped being ripped up by farmers hungry for land or by timber traders? To protect them, villages like Buabeng have used another precious resource, their social cohesion and organisation, to protect the surviving forests for the common good. Social capital, in other words, has been invested to protect natural capital. And one result has been the accumulation of financial capital, as tourists have visited the grove in increasing numbers.

Other studies on these pages reveal similar strategies. In the cotton fields of India, poor farmers have increased their human assets, in the form of knowledge about the pests that infest their fields and alternative means of fighting them, and used it to reduced the drain on their financial capital caused by having to pay for constant spraying. The resulting financial gains have brought other benefits in the form of human assets. With reduced use of pesticides, the villagers are healthier and can afford more schooling for their children.

Similarly, in Rajasthan, an investment of human capital through researching new ways of feeding goats in the dry season has increased both the herders’ natural assets -- by producing more and fatter goats that provide more milk -- and their financial assets -- through the sale of those goats at market.

In Mozambique, farmers are successfully investing their time to catch rats, with gains to their natural capital in the form of crops and to their human capital in the form of better health and protein from rat meat.

And in the Amazon rainforests of Bolivia, farmers have invested their time, energy and cash in new crops to help preserve the fertility of their soils, their prime natural asset. They have done this in the expectation that this natural asset will, in future years, be convertible into financial wealth through the sale of new, valuable crops grown on more productive land.

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Access to assets

Access to assets with which to build a livelihood is generally more difficult for the poor. Poor households always have problems getting access to much money – financial capital. They are also likely to have difficulties getting access to other kinds of assets or capital which are in short supply – for example, land, the most basic form of natural capital.

Where things are changing rapidly, access to assets becomes even more of an issue. We can see this in Poland, where, with the very rapid change from one system to another, poor people have lost access to important assets they had under the socialist government. Under the socialist system, they had secure access to employment, although they did not have much financial capital. In the new system, they no longer have jobs, and access to financial capital is limited except for very few. People in the part of Poland we look at have turned to migrant labour as a traditional coping mechanism – and now, again, they are turning to this, spending periods working in other European countries in manual jobs to bring back cash. With this, they are able to build houses and to make life generally more comfortable.

In peri-urban areas, people are also exposed to change, which has particular kinds of characteristics. On the fringes of the town of Kumasi in Ghana, people are losing access to land and water for growing crops. As urbanization moves closer, developers are offering large cash incentives for chiefs to hand over the farming lands to them. Village social cohesion has traditionally been maintained through the control of the chief and his relatives, but that cohesion is breaking down. The chiefs are getting rich at the expense of the other villagers. There may be gains in the form of physical capital -- a new road to market, say, or a bus to jobs in the city. But that may not compensate as social and natural capital for the many is sacrificed for the financial gain of a few.

Governments and other outside agencies always play a role in how farmers and others can gain access to and use their assets. This can take many forms. It may be granting individual title to traditional land, so that occupants can use it to raise financial capital for their business. It may be providing the legal framework for a village to establish a wildlife reserve, such as the Buabeng monkey reserve in Ghana, and to help advertise it to potential foreign visitors. In the case of the peri-urban farmers of Kumasi, if may involve setting up bodies to allow the farmers to participate in local planning and to have a say in the use of their prime asset -- their land. In Harare it might involve relaxing the rules on urban farming.

The one certainty is that all of us -- whether farmers or not -- require access to all these kinds of assets in varying amounts to live healthy, fulfilled lives and to bequeath prospects that are at least as good to our children. The poor, whose access to assets is less secure, need support to increase access to vital assets to make their livelihoods as sustainable as possible.

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Thinking points

• Assets, or capital, come in many forms besides money. Human, natural, physical and social assets are just as important in building a livelihood.
• Different people have access to different kinds of assets, and will use them in different ways.
• Poor people have much less access to most assets than those who are better off.
• Governments and other institutions can play a vital role in breaking down barriers that prevent people gaining access to and using vital assets.

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In The Field is a collaboration between the BBC World Service and the Natural Resources Institute of the University of Greenwich, supported by the Rural Livelihoods Department of the UK Government Department for International Development (DFID)