Diversified Income

Outcome

number or % of households that gained an additional source of income that meets a minimum sustainability threshold

Income diversification enables households to avoid the risks associated with relying only on one main source of income. At the same time, meaningful income diversification needs to be economically and environmentally sustainable. Therefore, this indicator measures the extent to which the targeted households managed to diversify their livelihoods by gaining an additional income source that meets a minimum sustainability threshold.

Determine the indicator's value by using the following methodology:

 

1) Define “additional income source”. For example, when a household that is heavily reliant on crop production starts growing a new crop, can it be counted as an ‘additional income’?

 

2) Prepare a clear, easy-to-use checklist (yes/no) that can be used to evaluate the economic and environmental sustainability of each additional source of income. Consider using the four criteria listed below that represent the minimum sustainability threshold. A household passes the threshold if the answer is “yes” to the two economic criteria and “no” to the two environmental criteria.

Economic Sustainability

• Increased income: Has the new income generating activity increased the respondent’s average monthly income by at least [specify the % - e.g. 10% or 20%]?

• Income stability: Did the respondent have such an increased income at least 3 times in the past [specify the number of months – e.g. 5 or 6 months]?

Environmental Sustainability

• Resource Use: Does the income generating activity rely on using natural resources in a way that cannot be sustained in the long-term? (e.g. deforestation, water exhaustion)

• Environmental Impact: Does the activity cause / is likely to cause harm to the environment? (e.g. pollution or land degradation?)

 

3) Use review of existing records or conduct a survey among a representative sample of supported households to assess how many households gained additional source of income which passes the minimum sustainability threshold. A household passes the threshold if the answer is “yes” to the two economic criteria and “no” to the two environmental criteria.

  

4) To determine the indicator’s value in percentages, divide the number of households who gained additional source of income that meets the minimum sustainability threshold by the total number of surveyed households. Multiply the result by 100 to convert it to a percentage.

Disaggregate the data by the type of supported livelihoods activities and household head (male / female headed households).

1) Keep the criteria practical and locally relevant. Use the 4 core questions; only add more if they are easy to measure.

 

2) Provide sufficient training for data collection / analysis staff on how to apply the sustainability checklist consistently.

 

3) Keep in mind that it is common that some income generating activities are not economically sustainable. In some cases, unfortunately, they also are not environmentally sustainable. Therefore, when setting the target for this indicator, be realistic. If your results indicate that 100% of the target households have gained a sustainable source of income, it may suggest that the data collection or analysis process was overly optimistic.