The Contribution of Non-Physical Resources and Strategic Household Decision-making to Environmental and Policy Risks

Physical resources such as land, labour and livestock, and nonphysical resources such as indigenous knowledge and institutions of producers in the grain surplus and deficit regions of the Central Highlands of Ethiopia are examined under situation of environmental and policy risks. Frequency distribution and comparative statistical analysis of the grain-surplus regions suggest that in situations where all producers are subjected to a common source of risk (e.g. rainfall): I) institutional resources become less effective, and ii) combination of land, labour, knowledge and other complementary resources form the basis for adjustment mechanisms and sequential or strategic decisions. On the other hand, when essential resources such as land are government owned and household decisions are shared by the state, local institutions or social networks become an effective means to maintain reproduction of the farm and producers through providing access to or sharing of resources. In the extreme case of environmental degradation (e.g., drought), farmers follow sequential decision-making. This sequence of decision-making begins with minimization of expenditure, selling of resources that are intended to stabilize farm income, selling of resources essential to farming and depletion of household items, and finally evacuation. The ability of such farming system to regenerate, however, greatly depends not only on the availability of physical resources but most importantly by the potential of knowledge and institutions of producers to adjust to environmental changes, and support from governmental or non-governmental sources.