1	Impacts of Investments and Livelihood Strategies in Less Favored Areas: Evidence from Asia, East Africa and Central America John Pender, IFPRI USAID Seminar on Marginal Areas, Feb. 3, 2005
2	Outline Background and rationale What are less-favored areas (LFA’s)? Why be concerned about them (or not)? Returns to investment in LFAs India China Uganda Impacts of investments and livelihoods on production, income, land degradation in LFAs Ethiopia Uganda Honduras Conclusions and implications
3	What are “less-favored areas”? Less-favored areas are less favored by nature or by man, including areas with low agricultural potential, due to limited rainfall, poor soils, steep slopes, etc. (biophysical constraints); or limited access to infrastructure (e.g., roads and irrigation) and markets (socioeconomic constraints)
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5	"Less-favored areas include most of" Less-favored areas include most of semi-arid and arid tropics of Asia and Africa mountain areas of Asia, Latin America and Africa hillside areas in Central America and Asia forest margins of humid and sub-humid tropics of Africa, Latin America and Asia
6	Why be concerned about less-favored areas? Over 1 billion people live in such areas These areas were largely bypassed by the Green Revolution Problems of low agricultural productivity, poverty, and natural resource degradation severe and worsening in many such areas Problems in these areas give rise to conflict, emigration to other areas, negative environmental consequences
7	The Conventional Wisdom Emphasize public investments in agricultural R&D, infrastructure, etc. in favored areas where returns are higher Benefits of increased food production, income and foreign exchange from favored areas will spread through lower food prices and migration to favored areas Resources improve due to reduced pressure on fragile resources in less-favored areas
8	Challenges to the Conventional Wisdom Rapid population growth continues in less-favored areas Problems of poverty and resource degradation getting worse in many cases Evidence of diminishing returns to investment and increasing environmental problems in favored areas Evidence of higher or comparable returns to investments in less favored areas in some countries, and greater impact on poverty (“win-win” strategies) Some evidence suggests possibility of “win-win-win” strategies benefiting the environment alongside economic growth and poverty reduction
9	Returns to investments in LFA’s Evidence from three countries (Fan and colleagues) India China Uganda
10	Returns to Investments in India – Impacts on Agricultural Production (Fan and Hazell 1999)
11	Returns to Investments in India – Impacts on Poverty Reduction (Fan and Hazell 1999)
12	Returns to Investments in China – Impacts on Rural GDP (Fan, et al. 2004a) (yuan/yuan inv.)
13	Returns to Investments in China – Impacts on Poverty Reduction (persons/10,000 yuan inv.)
14	Returns to Investments in Uganda – Impacts on Agricultural Production (Fan, et al. 2004b) (Ush/Us invested)
15	Returns to Investments in Uganda – Impacts on Poverty Reduction (persons/million USh inv.)
16	Impacts of Investments and Livelihoods on Production, Income, and Land Degradation in LFA’s Evidence from three countries (Pender and colleagues) Ethiopia – highlands of Tigray and Amhara Surveys of 934 households in 198 highland villages Uganda 451 households in 107 villages Honduras hillsides 385 households in 95 villages in 19 municipalities
17	Ethiopia – Tigray and Amhara Study Regions
18	Selected Determinants of Crop Production, Income and Erosion in Tigray Highlands (Pender and Gebremedhin (2004))
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20	Impacts of Selected Investments in Tigray Highlands – Simulation Results
21	"Rates of return to selected..." Rates of return to selected household investments in highlands of Tigray Stone terraces 34% (Pender and Gebremedhin 2004) 50% (Gebremedhin, et al. 1998) Tree planting 20% to over 100% (Jagger and Pender 2003) Fertilizer -14% (Pender and Gebremedhin 2004) Livestock (Pender, et al. 2002) Cattle: 36% Poultry: 32% Beekeeping: 44%
22	Uganda – Study Region Source: Ruecker, 2002
23	Selected Determinants of Crop Production, Erosion and Income in Uganda (Nkonya, et al. 2004)
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25	Impacts of Selected Investments in Uganda – Simulation results
26	Honduras: Study Sites
27	Selected Determinants of Crop Production and Income in Hillsides of Honduras – Preliminary Results (Jansen, et al. 2005)
28	Impacts of Selected Land Management Technologies on Crop Productivity
29	Conclusions/Implications High returns to many public investments in LFA’s and greater impact on poverty in India, China, and Uganda There are investments/livelihoods that can increase crop production, income, and/or reduce land degradation in less-favored areas; e.g. Tigray: stone terraces, reduced tillage and burning, manure, alternative livelihoods, market development Uganda: livestock production, other livelihood strategies Honduras: manure, fertilizer, machinery/equipment, livestock production But trade-offs are often apparent; e.g. Effects of technical assistance in Uganda and Honduras Effects of education in Uganda Effect of farm work in Honduras
30	Conclusions/Implications (2) Impacts of interventions/investments are context dependent, linked to local comparative advantages: Low returns to cereals in Tigray and low potential Amhara à low returns to fertilizer, extension, credit Higher returns to livestock, beekeeping, tree planting, nonfarm activities in Tigray High returns to cereals and fertilizer in high potential Amhara Higher returns to bananas, livestock in highlands of Uganda Development strategies for less-favored areas should take local comparative advantages and disadvantages into account