Livelihood diversification and household economic security: Evidence from small-scale fisher households in Kerala state, India

Abstract

Rural households dependent on natural resource-based livelihoods are particularly vulnerable to external shocks such as natural disasters, diseases, market fluctuations, and climate change. These external shocks can severely impact a household's income, wealth, and consumption. The COVID-19 pandemic disproportionately affected various economic sectors, with the poor and marginalized sections of the population suffering the most during the pandemic. This study analysed the economic security of small-scale fisher households during the COVID-19 pandemic, focusing on the role of livelihood diversification in mitigating its impact. Small-scale fisher households in Alappuzha and Ernakulam districts of Kerala were selected for the study. The analysis explored the pandemic's effects on household income, expenditure, and indebtedness. Economic security was assessed by developing an Economic Security Index (ESI), and livelihood diversification was assessed using Simpson Index of Diversity. A multiple linear regression model was employed to determine the relationship between household income and selected predictors. The results indicated that households in Alappuzha exhibited higher economic security (ESI: 0.46) compared to that in Ernakulam (ESI: 0.41). Annual household income during the pandemic ranged from ?102,710 in Ernakulam to ?132,638 in Alappuzha. Monthly household expenditure saw a 30% reduction in Ernakulam households, compared to a 21% reduction in Alappuzha. The pandemic exacerbated the debt burden of small-scale fisher households, with over 75% resorting to informal borrowing to cope with the economic crisis. Average borrowing during the pandemic was significantly higher in Ernakulam (?41,025) compared to Alappuzha (?15,565). The study revealed that livelihood diversification significantly influenced household income, highlighting the critical need for diversification programs to enhance the resilience of small-scale fisher households to external shocks.