This study explores households’ dependency on environmental income for households that engage in
different livelihood strategies. This study also investigates the impact of environmental income on
rural household poverty and inequality, and identifies factors that determine the choice of rural
households’ livelihood strategies in rural communities in Vietnam.
A cluster analysis identifies five livelihood strategies: wage dependency; non-farm, non-wage
dependency; mixed-income dependency; transfer dependency; and environment dependency.
Households engaging in various livelihood strategies differ in their asset endowments. Households
engaging in environmental dependency strategy are more likely to have abundant labour, land and
physical capital. However, those following more remunerative livelihood strategies, such as mixedincome
and non-farm, non-wage dependencies, are more likely to be endowed in financial and social
assets.
Environmental income accounts for 40.65% of total household income, of which 36.89% comes from
agricultural activities and 3.77% comes from common property resources extraction. In addition, the
study finds that environmentally dependent households are the most reliant on environmental
resources in both relative and absolute terms. Environmental income provides 82.48% of total
income to households in this strategy group, which is worth about 11.8 million VND per capita per
year. This amount is significantly higher than that of the other strategy groups.
The findings confirm the contribution of environmental income to income inequality and poverty
reduction. In terms of income inequality, on average, the inclusion of environmental income reduces
the Gini coefficient by more than 20%, from 0.598 to 0.475. With respect to rural poverty,
environmental income reduces the poverty headcount index, poverty gap and poverty severity by
28.0%, 22.5% and 18.7%, respectively.