Livelihood diversification gains have increased traction, but as a resilience strategy, livelihood diversification has imperfect success. A more precise understanding is needed of the relationship between livelihoods and resilience. Consensus is emerging that the true target for diversification should be the risk portfolio of liveilhood activities. That is, the resilience value of multiple livelihood activities is best realized if the activities are accompanied by different risks.

However, if households diversify the risks within their livelihood portfolios, will they then be exposed to additional risks? And will this additional risk exposure neutralize the benefits households achieve from diversification?

Looking at Ugandan farming households, this analysis found no significant association between households' risk exposure and their pursuit of additional livelihoods beyond farming. It is possible that farming presents so many vulnerabilities to shock that livestock rearing, non-farm enterprise and paid employment introduce few additional risks.

These households do exhibit an association between livelihood diversification and avoidance of negative coping behaviors in response to shock. In particular, households running a non-farm enterprise have 28 percent lower odds of taking negative coping action in response to shock. We can speculate that additional livelihoods may introduce few additional shocks to farming while offering income streams less affected by some shocks. We should also allow for the possibility that households that run enterprises may have different ways of thinking, planning and deploying household resources that also affect their coping behavior.

This report (included in the sidebar) discusses additional factors associated with household exposure to shocks and their coping behaviors. For example, along with diversified livelihoods, a significant predictor of household avoidance of negative coping behaviors is that all members of the household have shoes; however, there is no association with other measures of wealth.