Livelihoods are our means of everyday support and subsistence. As commonly conceived, a livelihood generates financial resources that come from employment or subsistence activities. But livelihoods also draw on other resources: human and social resources that give structure and context to our daily lives, as well as the natural and physical resources that underpin our work. In the 1990s, development agencies began to adopt this more holistic view of livelihoods, with the goal of focusing development activities more effectively. The UN Development Programme’s Human Development Reportsin particular drew attention to human well-being—defined by health, education, opportunity, a healthy environment, and a decent standard of living—as the core of developmentpractice (Solesbury 2003:vii).

The United Kingdom’s Department for International Development (DFID) made the “sustainable livelihoods approach” a core principle of its development strategy in 1997 (Solesbury 2003:vi). Building in part from the Human Development Reports and the 1987 Brundtland Commission Report, Our Common Future,DFID’s approach assesses the strengths and vulnerabilities of poor people in terms of five types of capital: human, social, natural, physical, and financial (UK DFID 1999:2.3). As opposed tothe more traditional focus on macroeconomic policies, this approach puts people at the center of development and is inherently nonsectoral. It also explicitly concerns itself with the condition of the natural resource base.

The “sustainability” element of the livelihoods approach is achieved by helping people to build resistance to external shocks and stresses, maintain the long-term productivity of natural resources, move away from dependence on unsustainable outside support, and avoid undermining the livelihood options of others. Addressing these challenges requires that development agencies view the poor as a mixed, rather than a homogenous, group, and tailor policies to the various sub-groups. Listening to the poor and involving them in the policy process is a key partof this approach (UK DFID 1999:5, 7; Chambers and Conway 1991:6).

The sustainable livelihoods approach has been recognized and adopted to varying degrees by a number of development agencies. One of the challenges of its application is finding ways to match such a dynamic framework to existing policies and institutions (Hussein 2002:55). That is why an emphasis on governance—dealing with who wields power and how decisions are made—has become a key element in modern development practice.