1. Diversification of economic portfolios to deal with climate variability: Case study of livelihoods strategies in two Andean communities Carolina Barreda 1 Corinne Valdivia 2 Roberto Quiroz 1 1 International Potato Center. Lima, Perú 2 University of Missouri. Columbia, USA Prepared for presentation at the Open Meeting of the Global Environmental Change Research Community, Montreal, Canada, 16-18 Octubre, 2003.

2. Introduction Diversification is considered a mechanism to deal with the effect of climate in the Andean region. High level of uncertainty typifies the lives of people in peasant farm household in developing countries. Variation of climate tend to be more severe in their impact on crop yields in the tropics. There is a complex interaction between diversification poverty and income distribution

3. Anccaca Population 67 families Extension 1091 ha. Santa Maria Population 77 families Extension 340 ha.

4. Natural Capital Thermopluviometric Map Land Cover and Use Map Altitude Map Source: Quiroz, R. et al. CIP Program report 1999-2000

5. Productive Capital

6. Human Capital

7. Financial Capital

8. Theoretical Framework This work is embedded in Peasant Household Agricultural Production framework that describe the ways people in peasant families make use of the resources at their disposal for production family survival and where possible for improving the quality of their lives.

9. Objectives Determine if a relationship between diversification and income levels exist Identify livelihood strategies and their relations with the nature of the portfolio

10. Methodology A production-consumption survey to 110 households randomly selected was conducted during October of 2000. A typology was identified through cluster analysis, grouping households according to the income levels and to the first canonical variables for diversification and income sources.

11. Canonical correlations were used to analyze the relationship between portfolio diversification and income levels.

12. Results

13. Livelihood strategies by types of household

15. Diversification and Income Levels When the entire dataset was included in the analysis, only a linear positive trend between the first canonical variable of the explanatory and response sets was found.

16. Group 1 For the first group analysis, only a linear positive trend between the first canonical variable of the explanatory and response sets was found.

17. Group 2 For the second group analysis, a better adjusted linear positive trend between the first canonical variable of the explanatory and response sets was found.

18. Group 3 For the third group analysis, a better linear positive trend between the first canonical variable of the explanatory and response sets was found.

19. Conclusions The study showed that there is a relationship between diversity and income levels. The strength of the relationship is a function of the livelihood strategies. When the strategies are based mainly on production for consumption, diversification explains only a limited portion of the changes in the levels of income. The relationship between diversification strategies and income levels seemed to be more robust when sales and remittances were incorporated in the portfolio.