Consumption and Vulnerability Among Foragers and ... - UTSC

World Development Vol. 31, No. 8, pp. 1405–1419, 2003 Ó 2003 Elsevier Ltd. All rights reserved Printed in Great Britain 0305-750X/03/$ - see front matter

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doi:10.1016/S0305-750X(03)00099-8

Consumption and Vulnerability Among Foragers and Horticulturalists in the Rainforest of Honduras GRACE Y. WONG University of Florida, Gainesville, FL, USA and RICARDO GODOY * Brandeis University, Waltham, MA, USA Summary. — It is often said that poor rural households in developing countries remain inadequately insured against shocks. Using panel data from Tawahka Amerindians in the Honduran rainforest, a horticultural/foraging society, we estimate the consumption-smoothing ability and vulnerability to risks of 32 households in two villages with varying degrees of market openness. The information was collected using cultural anthropology methods, and key variables were estimated through direct observations and physical measures to reduce measurement errors. Results suggest that household consumption is directly affected by income shocks, despite the practice of partial insurance and risk-sharing within communities. In a comparison between the villages, we find evidence that households practice distinctly different consumption-smoothing behaviors, partly driven by their gap in economic development. Ó 2003 Elsevier Ltd. All rights reserved. Key words — informal insurance, safety nets, consumption smoothing, rainforest, Latin America, Honduras, Tawahka

1. INTRODUCTION In developing countries, uncertainty and risks associated with events such as illness, drought, floods, outbreak of pests, or political instability frequently affect the income of rural households. Over many centuries, rural households have developed complex institutional arrangements to protect themselves from unanticipated events that produce economic hardships. To minimize losses, rural people take precautionary steps before, and draw on various safety nets after, mishaps strike (Morduch, 1999). For example, rural households produce in conservative ways in anticipation of mishaps, such as drought or outbreak of pests. They shield their crops from possible future losses by scattering fields (Goland, 1993), by staggering the timing of planting (Winterhalder, Lu, & Tucker, 1998), by using different varieties of the same crop (Bellon & Taylor, 1993; Brush, Taylor, & Bellon, 1992), by sowing different

* This study was financed by: (1) the Programs of Cultural Anthropology and Human Dimensions of Global Change of the National Science Foundation (SBR 9417570, DBS 9213788, SBR 9307588) and (2) the Joint Committee on Latin American Studies of the Social Science Research Council and the American Council of Learned Societies with funds provided by the Ford Foundation. Glenda and Adoni Cubas, Josefien Demmer, Kendra McSweeney, and Han Overman collected the information used in the study. David Wilkie and Nick Brokaw helped design the methods to measure consumption. Kendra McSweeney and Osvaldo Munguia provided information on the aftermath of Hurricane Mitch. Luis Locay, Jonathan Morduch, Robert Emerson and Janaki Alavalapati gave technical advice, and Han Overman, Bruce Winterhalder, and Shanti Rabindran provided useful comments on earlier drafts. Last, we would like to thank the very useful comments of two anonymous reviewers. All other remaining errors are our own. Final revision accepted: 11 February 2003.

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WORLD DEVELOPMENT

crops on the same plot (Godoy & Bennett, 1991), and by reducing the use of expensive modern inputs for agriculture (Morduch, 1995). The methods protect farmers, but they come at a cost. Morduch (1995, pp. 105–106) estimates that farmers may give up 10–16% of crop output from producing in conservative ways. In the southern Peruvian Andes, Goland (1993) found that field scattering reduced net production by 7%. If they cannot take precautionary measures before mishaps strike, rural households rely on many forms of informal insurance after the misfortune. They draw on redistribution (Monaghan, 1990), gifts and loans (Winterhalder, 1996, 1997), remittances, credit (Chibnik, 1990), savings (Brown & Foster, 1995; Deaton, 1989; Fafchamps, Udry, & Czukas, 1998; RowleyConwy & Zvelebil, 1989), their own assets (Rosenzweig&Wolpin,1993),outmigration(Rambo, 1995), wage labor (Ortiz, 1990), or tolerated theft (Bliege Bird & Bird, 1997). Most rural households use both to protect their income and consumption, as precautionary measures and safety nets. There is mixed evidence on the effectiveness of informal insurance mechanisms, depending on the locale of the study and size of shocks. Evidence from rural households in Asia and Africa suggests that idiosyncratic income shocks affect consumption (Morduch, 1995; Townsend, 1995), but other evidence (Kochar, 1995; Rosenzweig & Wolpin, 1993; Paxson, 1992; Wolpin, 1982) suggests that farming households protect themselves well against small and medium shocks such as crop losses, mild illness, and rainfall fluctuations, but not against large or covariant shocks (Gertler & Gruber, 2002; World Bank, 2001). Most of the studies just cited were carried out among smallholders in developing countries with a foothold in market economies. Smallholders typically lie in the middle of an idealized autarky-to-market continuum. Many of their traditional forms of insurance have collapsed and modern ones have yet to emerge in full. Perhaps because they find themselves in a transition stage, smallholders face more economic vulnerability. In a study of farming villages in northern Thailand displaying different degrees of exposure to the market, Townsend (1995) found that even the village most integrated to the market lacked . . . internal credit and insurance arrangements of almost any kind, and for episodes of severe illness, at

least, some households seem to suffer changes in consumption. This observation then raises difficult questions. Does insurance in the form of indigenous arrangements deteriorate with [economic] growth? Should the link between insurance arrangements and growth be called into question? (our emphasis) (Townsend, 1995, pp. 97–98).

That is the gap we intend to address in this paper––the adequacy of informal insurance in buffering consumption during mishaps, and its role during the transition to a market economy. In particular, we examine the vulnerability of households in two rural villages: one remote and poor, the other wealthier and close to the market. Section 2 describes the methods used to collect information, provides an ethnographic sketch of the two villages, and presents results from bivariate analyses of the householdÕs coping strategies to idiosyncratic income shocks. Vulnerability to risk can be defined by the degree to which the growth rate of consumption covaries with the growth rate of income (Skoufias, 2002). This definition explicitly acknowledges that households adopt various insurance and risk management strategies to protect themselves from income shocks. For the empirical analysis, we use household panel data from Tawahka Amerindians, a relatively isolated society of foragers and horticulturists in a remote rain forest region of eastern Honduras known as La Mosquitia.

2. DESCRIPTION OF INFORMATION Five students collected the panel data from 32 households of Tawahka Amerindians during 212 years (June 1994–December 1996). Research took place in two villages, Krausirpe and Yapuw as. Krausirpe is closer to the nearest market town and is more affluent than Yapuw as. (a) Uniqueness of the information The information we use is unique in several ways that merit brief mention before turning to the empirical analysis. First, researchers in the two sites used the same methods to collect panel information. The use of the same methods to collect information across sites facilitates comparison. Second, researchers measured consumption and shocks to income (proxied by illness) through direct observations to reduce measurement errors. Finally, although the

CONSUMPTION AND VULNERABILITY

Tawahka are relatively autarkic, the two villages display different degrees of exposure to the market, allowing us to compare household consumption along different points in an idealized autarky-to-market continuum. The Tawahka provide an ideal laboratory for answering TownsendÕs query whether economic development increases economic vulnerability. (b) Sample and methods The sample included all 16 households in the poorer village of Yapuw as and 16 (of about 53) households in the richer village of Krausirpe. The 16 households from Krausirpe included 12 of the more affluent households and four of the poorer households. Attrition was not a problem. Only one household left the sample (and area) because of conflicts with other villagers. Ten new households were formed when they split from other households. We included the new households at the moment of creation. We define a household as the group of people who cooked on the same hearth, whether or not they had kinship links with each other. The definition matches the TawahkaÕs own definition of a household. Researchers collected information during 10 consecutive quarters, but we exclude information from the first two quarters because we used that period to test methods and to enhance the reliability of coding among researchers. Below we describe the methods used to collect information. (i) Weigh days and consumption Cultural anthropologists use weigh days to measure consumption in nonliterate, simple rural economies to avoid errors from faulty recall that typically arise from surveys (Bernard, Killworth, Sailer, & Kronenfeld, 1984). A weigh day consists of identifying, weighing, measuring, and valuing all goods entering a household from morning until dusk on days chosen at random. Researchers valued goods in the state the goods were in when they entered the household. For instance, wild fruits brought on a weigh day but later dried and grounded would have been value as fresh fruits; we would not have included the value added of processing unless the good entered the household in that state on the weigh day. For goods without a village price, researchers asked a group of Tawahka once a month to agree on how much of a good with a known price (e.g., salt) they would exchange for the good without a price. In this way we obtained consensus on

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villagerÕs willingness to pay for local goods without a price. We measured consumption on 140 days during 1995–96, 71 of those days took place in Yapuw as and 69 took place in Krausirpe, 54 in 1995 and 86 in 1996 (Table 1). Researchers did an average of 20 weigh days for each day of the week from Tuesday until Friday, 27 weigh days on Saturdays, nine on Sundays, and 26 on Mondays. Researchers did about eight weigh days each month, except during June–September and November when researchers did about 12 weigh days each month. Because researchers measured consumption by the flow of goods entering a household on days chosen at random, a household could have no consumption during a quarter. This could happen, for instance, if a household used stored firewood and stored food during a day when researchers measured consumption. This was likely to happen on holidays and on Sundays. Out of the 224 measures of quarterly consumption, 10 measures or 4.46% of the sample had values of zero. (ii) Scans or spot observations of illness and income shocks Scans or spot observations is a decades-old method used by cultural anthropologists to estimate the allocation of time by foragers and horticulturists (Sackett, 1996; Sackett & Johnson, 1998). The method consists of observing people over several months or years during days and during blocks of time chosen at random. Done over a long time, scans produce reliable frequency distributions for the most common types of behavior, but they do not yield information on the intensity of the behavior. During scans, researchers recorded what every person over 4 years of age was doing at the moment they first saw the subject. Researchers did scans during days chosen at random each month. On those days they randomly selected a block of time of three hours to observe subjects (6 am–9 am, 9 am–12 pm, 12 pm–3 pm, 3 pm–6 pm). People who stayed at home because they were too ill to work were spotted on scans and classified as ill. Scans produce reliable information for the more severe bouts of illness that force people to stay at home. But scans underestimate illnesses perceived as milder by subjects. Scans also produce errors when sick people stay at home doing light routine household chores. Researchers would have then coded the behavior of a person as a form of

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WORLD DEVELOPMENT Table 1. Number and frequency of weigh days to measure consumption

By village

Year

Total

1995

1996

Yapuw as Krausirpe Total

27 27 54

44 42 86

By month

Observations

Share (%)

January February March April May June July August September October November December Total

5 8 9 8 8 15 19 15 17 8 19 9 140

3.57 5.71 6.42 5.71 5.71 10.71 13.57 10.71 12.14 5.71 13.57 3.42 100.00

Observations

Share (%)

9 26 21 20 17 20 27 140

6.42 18.57 15.00 14.28 12.14 14.28 19.28 100.00

By day of week Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total

housekeeping rather than as recuperating from illness. Of the 28,294 observations from scans, 480 or 1.7% of the total sample dealt with episodes of illness. Yapuwas and Krausirpe had 195 and 285 observations of illness, representing 40.62% and 59.38% of the total episodes of illness. The difference in the episodes of illness between the two villages was statistically insignificant (v2 ¼ 0:29, p ¼ 0:59). (iii) Surveys of wealth To estimate wealth, researchers did an inventory of selected physical assets owned by the household, including farm goods such as annual and tree crops, seeds, and domesticated animals. Researchers also asked key informants about the useful lifetime of physical assets and used straight-line depreciation and current village selling prices to value physical assets in their current state. Because it took researchers

71 69 140

too much time to measure the complete inventory of physical assets owned by the household, researchers only measured wealth three times during the study. The variable wealth does not contain as much variation across time as information for variables that researchers collected with more frequency. (iv) Surveys of income Once a month we asked each adult for all sources of cash earned during the month before the interview. Limiting the survey to the month before the interview enhanced the accuracy of recall. Interviews were open-ended and allowed subjects to specify whether the cash earned had come from the sale of crops, gold, animals, animal products, or labor, from remittances, from loans repaid to the household, from the rental of equipment (e.g., dug-out canoes), or from dividends received from the cooperative store in the village of Krausirpe.

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(v) Human capital and demography During the first 3–4 months of fieldwork researchers asked about the age and the maximum education of household members and their parents, assessed competence in spoken Spanish and in various Indian languages, and gave tests to measure literacy in Spanish and knowledge of arithmetic. We aggregated all the socioeconomic and demographic information just described into quarters for the statistical analysis. In mid-1995 we did a socioeconomic and demographic household survey among most (n ¼ 88) of the Tawahka population (n ¼ 101 households) (Godoy et al., 1997), not just among the 32 households that formed part of the panel. In Sections (c) and (d) we often use information from the 1995 survey to describe the population from which we took the sample. Much of the information collected during 1995 refers to 1994. Although we use the 1995 information to describe the socioeconomic and demographic background of the Tawahka, we do not use that information in the regression analysis. (c) Ethnographic sketch Since at least the 17th century the Tawahka have lived in the rain forests of eastern Honduras in a region known as La Mosquitia (Conzemius, 1932; Davidson & Cruz, 1988; Landero, 1935). Although the area is relatively isolated because it lacks roads linking it to western Honduras, it has faced growing encroachment from colonist farmers and from cattle ranchers moving east (Herlihy, 1997). Within eastern Honduras, the Tawahka, who number about 1,000 people, live in five settlements along the Patuca River (Caicedo, 1993). Until Hurricane Mitch hit eastern Honduras at the end of October 1998, about half of the Tawahka lived in one of the research sites, the village of Krausirpe, which lies farthest down river (and closest to the market town of Wampusirpe). Krausirpe lies 30 km from Wampusirpe in a straight line. The information and the analysis reported in this article refer to events before Hurricane Mitch. Table 2 contains a summary of background demographic and socioeconomic information from the general household survey done in 1995. The average Tawahka household head has lived for 20 years in her or his present residence. Household heads are 38.7 years old; their households contain 7.7 people, half of

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them adults (evenly split between women and men) or people over the age of 12. Educational attainment is low and skewed toward males. The average male household head has 2.6 years of formal schooling, compared with 1.4 years of schooling for female heads. Sixty-one percent of household heads know Spanish. Tawahka subsistence centers on extensive slash-and-burn cultivation away from rivers and on more intensive farming by riverbanks. The Tawahka plant cacao and beans in the most fertile plots by riverbanks and put other perennials and annuals, such as maize and rice, in upland plots cut from old-growth or from fallow rain forests. Households have usufruct rights to a total of 20.8 ha of forest, split between lands under active cultivation (2.4 ha) and lands under fallow (18.4 ha). In 1994 the imputed annual value of farm production was 6,800 lempiras (La) per household (1US$ ¼ 9.40 La in 1994) (Table 2). We defined imputed income as the value of the three chief crops: beans, rice, and cacao. The Tawahka use machetes, axes, and digging sticks to clear the forest, to plant, and to harvest. Although simple, their technological kit also includes improved plant varieties and chemicals for farming. In 1994, 43% of Tawahka households used chemical herbicides, 70– 88% planted improved varieties of beans and of rice, and 37% used hybrid seedlings of cacao (Table 2). In addition to farming, the Tawahka also hunt, collect wild plants (House, 1997), and keep domesticated animals. The average household had 13.4 chickens, a head of cattle, and 0.4 pigs (Table 2). The villagers swap goods and services with each other, but they need cash to buy food during the agricultural lean season, school supplies, and medicines, and to pay for modern health services. They also need cash to buy food when mishaps strike. The Tawahka we surveyed in 1995 reported losing about a third of their potential bean and rice harvest and 55% of their cacao harvest to pests, diseases, and bad weather in 1994 (Table 2). Besides crop losses, other shocks include illness, theft, and fires. In 1994 the average Tawahka household earned about 1,000 La in cash income. Tawahka earn cash in several ways. Some work outside their villages, panning gold, making dugout canoes for sale (McSweeney, 1999), or helping in cattle ranches one or two days upriver. A few work for the Tawahka government or, as teachers, for the central government. The

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WORLD DEVELOPMENT Table 2. Socioeconomic characteristics of Tawahka population

Variable (1) Demographic Residence duration Age of hh head Hh size Adults (> ¼ 12 yrs) Children (