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Household Economy Analysis (HEA) in the North-West and North-Central Region of Bangladesh

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EXECUTIVE SUMMARY

INTRODUCTION AND METHODOLOGY

In October 2021, Start Fund Bangladesh commissioned a detailed livelihood study applying the household economy analysis (HEA) framework. This report presents findings of HEA conducted in the north-west and north-central parts of Bangladesh during October-November 2021 in order to gain in-depth understanding of the livelihood and means of survival for different wealth groups, and the seasonality of livelihood strategies. The study provides more evidence-based information to support designing more effective forecast-based financing (FbF) and risk financing mechanism of Start Fund. Household Economy Approach (HEA) was used as the guiding methodological framework for the study. Specific data collection method included focus group discussions (FGDs), key informant interview (KII), consultative workshop with UN, INGOs and Start Fund representatives as well as review of available secondary documents and reports. All data are available in this link.

SUMMARY OF FINDINGS

Livelihood Zoning

This study did not conduct livelihood zoning exercise; instead used livelihood zones determined by World Food Programme in 2016 through a rigorous exercise involving government department of agriculture extension. WFP determined two livelihood zones in the north-west and north-central region of Bangladesh, such as Char and River Basin. The rationale for conducting baseline analysis in these zones for this study is that there is no significant change in peoples’ livelihood practices and overall economic context. Over 80 percent people living in both zones are dependent on agriculture for their food and cash income. A brief description of livelihood zones is:

Livelihood Zone: Char Zone

Brief Description of Livelihood: Riverine islands in the Brahmaputra and Teesta rivers. Only means of communication is boat. Soil types vary form highly sandy to high clay. The most common soil type being mixed sandy and clay. Soil type supports cultivation a wide range of crops such as Aman and Boro rice, wheat, millet, maize, lentil, chilly, jute, mustard, groundnuts, sesame, pulses and vegetable. Majority of people rely on agriculture for their livelihood. Over 50 percent of poor households either own the cow or shared cow. People have access to market and can buy food commodities and basic household items from the markets. Flood is most common hazard in Char which occurs almost each year and affect crops, houses and livestock and livelihood of people.

Livelihood Zone: River Basin Zone

Brief Description of Livelihood: Mainly mainland. It includes the adjacent villages located on the bank of two rivers – Brahmaputra and Teesta. The villages are logistically connected to normal road network to other districts. The villages in the river bank areas are different from further inland villages because they are lower and subject to annual inundation by two rivers, while further inland is only affected by occasional larger flood. People grow a range of food and cash crops, including Boro, Aman, Jute, mustard, maize and variety of vegetables. Majority of people rely on agriculture for their livelihood. Annual flooding is common which affect crops, houses and livelihood of people. In the last 10 years, Aman rice has been successfully harvested 3-4 times. As result, people do not prefer cultivation of Aman rice, instead, they mostly prefer cultivation of Boro.

Baseline Analysis

Wealth and Asset Profile

The baseline findings show that 35 percent of households are categories as Extreme Poor (EP) in the Char zone while 40 percent as Poor. Households fall in the Middle category constitute 17 percent of total households and rich 8 percent. Wealth is primarily determined by the amount of land a household is able to cultivate, access to land, ownership of livestock and productive asset.

In the River Basin zone, 20 percent of households are categories as Extreme Poor (EP), while 43 percent Poor. Household belong to Middle and rich wealth group constitute 27 percent and 10 percent of total households. Wealth is primarily determined by the amount of land a household is able to cultivate, access to land, ownership of livestock and productive asset.

Sources of Food Income

In both zones, the Extreme Poor and Poor households heavily rely on market for their food. In Char, market purchase met 91.5 percent of food needs of Extreme Poor households and 77 percent food needs of Poor households. Labour exchange was the second important food sources for both Extreme Poor and Poor households which met 9.2 percent of annual food needs of Extreme Poor households, while 7.7 percent of Poor households. The middle household obtain major portion of their food from own production which met 55 percent of their annual food needs.

In the River Basin, market plays a dominant role for supplying food for The Extreme Poor and Poor households. Market purchase met 89.6 percent of total annual energy needs of Extreme Poor households and 64.2 percent of the Poor households. Middle households met 81 percent of total annual energy needs from their own production. The second largest food source for Extreme Poor and Poor households was labour exchange which met 8-9 percent of their total annual energy needs.

Sources of Cash Income

The study findings show that income sources vary by wealth groups. The Extreme Poor and Poor households in both zones relied more on labour and loan while the Middle and Rich households relied more on selling their crops and livestock.

Char Zone

  • The Extreme Poor households earned an average BDT 109,900 in the reference year. Cash income from Labour exchange at local level accounted for 53.5 percent of total income, while migration met 25.4 percent of their total annual cash needs in the reference years

  • Poor households earned an average BDT 132,450 in the reference year. Labour exchange met 42.3 percent and migration met 22.5 percent of their annual cash needs in the reference year.

  • The Middle households earned an average BDT 198,900 in the reference year. They rely on own production, livestock and remittance which contributed to meet 44.7 percent, 20.1 percent and 20.1 percent respectively of their total annual cash needs.

  • Income from loan make up 11-18 percent of total income for Extreme Poor and Poor households.

River Basin Zone

  • The Extreme Poor households earned an average BDT 113,750, while the Poor households earned an average BDT 133,500 in the reference year. Income from labour exchange accounted for 54.8 percent of annual total cash needs for Extreme Poor households, while it was 42.5 percent for Poor households.

  • Migration was the second largest cash income source for both Extreme Poor and Poor households. Cash income from migration accounted for 26.2 percent of annual cash needs for Extreme Poor, while it contributed to meet 24.9 percent of annual cash needs for poor households.

  • Cash income from loan made up 15-17 percent of total income for Extreme Poor and Poor households.

  • Middle households mainly rely on their own production, livestock and remittance. Cash income from selling own production (rice and other crops) accounted for 44 percent of their cash income, while livestock 29.2 percent and remittance 12.2 percent.

Household Expenditure Pattern

Households in the two zones spent on a variety of items, including food, social services (school, health), inputs, clothing, livestock, transport, house maintenance, and loan repayment. The biggest expenditure of Extreme Poor and Poor households was on food, followed by loan repayment.

Char Households

  • The Extreme Poor and Poor households spent 39-48 percent of their reference year income on food.

  • The second largest expenditure was on loan repayment which accounted for 13-20 percent of total income of Extreme Poor and Poor households.

  • Expenditure on agriculture inputs made up 11 percent of expenditure of Poor.

  • Expenditure on education, transport, clothing accounted for 4-6 percent of total expenditure for Extreme Poor and Poor households.

River Basin Households

The study found similar expenditure pattern households across the wealth groups in River Basin zone.

  • Extreme Poor households spent maximum on food which accounted around 47.3 percent of their income, while Poor households spent 37.1 percent of their income on food.

  • Loan repayment accounted for 16-20 percent of total expenditure of Extreme Poor and Poor households.

  • Expenditure on agriculture inputs made up 11.8 percent of total annual expenditure of Poor

  • Expenditure Extreme Poor and Poor on education, transport, clothing, ranged between 4-5 percent of total annual expenditure in the reference year.

Effect of the Problem

Change in the Economic and Livelihood Context

The Extreme Poor and Poor households in Char zone found employment a total 168 and 160 days in agriculture field at local level, the Extreme Poor and Poor households in River Basin found 178 and 172 days. They mainly worked in land preparation, plantation, weeding and harvesting for Aman, Boro, and Jute. They also engaged in casual labour at local level. Flood 2020 had devastating effect on Aman, jute and casual labour which contributed to change in the livelihood and economic context in the study areas as

  • Aman harvest was 5 Percent in Char and 10 percent in River Basin of reference year.

  • Jute harvest was 5 percent in Char and 40 percent in River Basin of reference year.

  • Casual labour opportunity was 30 percent in Char and 60 percent in River Basin of reference years.