How can we better predict emergencies—before they emerge? Who are the people who need support —and what do they need? How much aid is needed—and where? How do we disperse aid in time—before things get worse? Is it possible to prevent a crisis in the future?

These are just a few of the questions that food security specialists in Ethiopia ask themselves. To answer these questions we require in-depth knowledge of the way people live.

Ethiopia is diverse. People within a single region live differently, are vulnerable to different hazards and cope differently when faced with external shocks. This is where the Household Economy Approach steps in. It supports decision-makers in getting the right kind of assistance to the people who need it—and in delivering it to them in time.

WHAT is the Household Economy Approach?
The Household Economy Approach describes the ways in which families in a livelihood zone manage their household. A livelihood zone is a group of households that obtain their food and cash income by roughly the same combination of means: they grow the same crops, they keep the same types of livestock, they depend on the same markets. The Household Economy Approach provides the following information.
Diverse livelihoods. The approach recognises different livelihoods which depend on distinct geography, climate, ecology and market access, taking into account that people live differently in different parts of the country.
Different wealth categories. The approach distinguishes between poor, middle class and better-off families and provides the percentage of people in each category.
Food, cash income and expenditure. The approach describes how ‘typical’ families within different wealth categories earn their food and cash income and how they spend it.
Markets. All families—poor, middle class and better-off—depend to some extent on the market. The approach gives a picture of people’s dependence on, and access to markets for buying and selling goods and services, including labour.
Seasonal changes. The approach gives a seasonal picture of household economies, showing changes in food and cash income and expenditure patterns throughout the year, thereby describing peaks and valleys in people’s access to food.
Hazards. The approach highlights the external shocks typical for a livelihood zone and their impact on people’s income and expenditure.
Coping mechanisms. Food crop failure, a rise in staple food prices, an outbreak of cattle disease, reduced access to market—whatever the shock, people will react. The Household Economy Approach describes the coping mechanisms of people in different wealth categories in response to a shock.

INFORMATION for decision makers
The Household Economy Approach supplies information which is complementary to the existing data, and supports the design of more effective emergency responses and long-term development programming.
Early warning at the woreda level. The Household Economy Approach provides a set of indicators tailored to a particular livelihood zone, which can help to predict emergencies at an early stage.
Response strategies. People will react to a shock. How they react depends on the nature of their livelihood and their income level. The Household Economy Approach predicts how people will cope in the case of an emergency, and what the scale of their food and cash deficits will be.
More than food. Though food security is an important factor for development, the Household Economy Approach creates a broader picture: one of livelihood security. This includes access to non-food items and services like water, sanitation, healthcare, veterinary services, crop extension services and education. Access to these is vital for long-term development.
Long-term development. Information about the way people live and their vulnerability to external shocks is an important input for sustainable development programming. Identifying the shocks that people in a community and knowing their reaction helps to adjust development programme design and policy formulation to the needs, possibilities and constraints of the people.

VALUE added
The Household Economy Approach is supplementary to the food security methods that are currently being used in Ethiopia. It is a tool that supports relief operations because it gives an answer to the major food security questions:
WHERE? The approach shows which livelihood zones are likely to be affected by particular shocks.
WHO? The wealth breakdown gives a more detailed insight into the people who need support in a specific area.
HOW MUCH? The methodology calculates more accurately the size of the food and expenditure deficit that people are likely to face.
HOW MANY? A better estimate of the number of people in need of assistance can be calculated.
WHAT? The Household Economy Approach describes the specific kind of support people need to overcome a shock.
WHEN? The indicators help to predict when an emergency will occur in a specific livelihood zone and how long its impact will be felt.
HOW LONG? The seasonal picture makes it possible to calculate more accurately how long people will need assistance.

NINE PORTRAITS of different household economies
In this folder you will find nine case studies—portraits of people from diverse wealth categories in nine different livelihood zones. These nine are only a fraction of the 42 different livelihood zones that exist in Ethiopia’s Southern Nations Nationalities and Peoples’ Region, but they provide insight into the kind of information that is supplied by the Household Economy Approach.
Although the case studies describe only one person in each particular livelihood zone, it should be noted that the Household Economy Approach is not an approach tailored to individuals. Rather, it provides an aggregate picture of the household economies of different wealth groups within a particular livelihood zone. Thus, each of the ‘portraits’ included herein describes a person typical of a wealth category within his or her particular livelihood zone. In order to provide a more complete picture, people have been chosen from different wealth categories—in some cases the farmer is poor, in others he or she is from a better-off family. The case studies describe not only their household economy, but also their vulnerabilities and possible interventions suggested by the information gathered through the Household Economy Approach.