Assessing livelihood vulnerability using a Bayesian network: a case study in northern Laos

Abstract

ABSTRACT. Agricultural transitions from subsistence to export-oriented production make households more reliant on volatile agricultural commodity markets and can increase households’ exposure to crop price and yield shocks. At the same time, subsistence farming is also highly vulnerable to crop failures. In this work, we define household livelihood vulnerability as the probability of falling under an income threshold. We propose the use of a Bayesian network (BN) to calculate the income distribution based on household and community-level variables. BNs reflect relationships of dependence between variables and represent all variables as probability distributions, which allows for the explicit propagation of variability and uncertainty between variables. We focus on two agricultural frontier case study areas (CSAs) in northern Lao PDR that are at different stages in the transition from subsistence to export-oriented agriculture. Because agricultural production is the main livelihood activity in both CSAs, we develop a BN that calculates the probability distribution of net household agricultural production income. BN structure and parameterization are based on data collected in 110 household surveys across both CSAs, as well as interviews with villagers, government officials, and private sector actors. We analyze the effect of crop price and yield variability, land-use portfolio, and land holdings, on the probability of having a negative net agricultural income, which reflects a household’s ability to meet its food consumption needs through cash crop sales. Results show that agricultural income is highly sensitive to rubber plantation area, rubber yield, and rubber price given the very large income potential of the crop. Households with larger agricultural areas have a lower probability of falling under an agricultural income threshold regardless of their diversification choices. Households that own more high-value cash crops are more buffered against rice yield shocks despite having higher agricultural income variability. However, low-income households are better off if they maintain a minimum level of rice sufficiency in combination with high-value cash crop production. Diversifying upland cash crops by increasing the share of cardamom (a lowvalue but low-volatility crop) at the expense of rubber (a highly lucrative crop with high price volatility) does not have a sizable beneficial impact, because returns from cardamom are significantly lower than for rubber. We show that BNs can be useful tools for the design and evaluation of rural development policies.