Climate Variability, Livelihood Diversification, and Household Food Security: Empirical Evidence from Rural Bangladesh

Climate variability has become much more obvious as a result of global climate change. Livelihood diversification including crop and income diversification is one of the most remarkable strategies to manage risk and cope with economic and climate shocks in order to improve rural livelihood. We investigate the empirical linkages among climate variability, livelihood diversification, and household food security, exploiting three waves of nationally representative rural household panel data merged with granular climate data in Bangladesh. Using instrumental variable methods to control for possible endogeneity of livelihood diversification decision, we find that climate variability affects both livelihood diversification and household food security, and income diversification improves per capita food expenditure while the effect of crop diversification on household food security is insignificant. In particular, the impact of income diversification on food security is found to be more sizable for the poorer households. The findings, therefore, highlight the pro-poor impact of diversification strategies within the context of rural South Asia, suggesting the need for diversification interventions targeting the rural poor, in terms of socioeconomic status, institutional conditions, and infrastructure.