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April 10, 2026Agricultural Economics Research Review0 citations

Farm Household Livelihood Diversification Under Climate Risk in the Central Region of Cameroon: Applying Modern Portfolio Theory

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MBMartial BindoumouVDVanelle DjeukemCNChristian‐Lambert Nguena

Key Points

  • The research aims to identify how households can diversify their income sources to mitigate climate-related risks.
  • Applied modern portfolio theory to assess income diversification options.
  • Evaluated income-generating activities including wild mango kernels, Gnetum africanum, cassava sticks, and maize.
  • Analyzed the impact of risk aversion on portfolio choices.
  • Identified a diversified income portfolio that reduces vulnerability to climate change.
  • Confirmed that the optimal portfolio does not change with varying risk-aversion levels.

Abstract

Uncertainty related to climate change imposes a new economic environment on households and implies the need to seek alternate sources like livelihood diversification. It was found that to reduce their vulnerability to climate-related risks, they have to diversify their incomes by choosing a portfolio consisting of wild mango kernels and Gnetum africanum on one hand and, on the other, cassava sticks and maize. The results also unveiled that the optimal portfolio remains unchanged, regardless of the value of the risk-aversion coefficient. This study intended to equip rural farmers with the knowledge and principles of combining income-generating activities to boost their livelihoods and effectively fight against poverty. JEL Classification: G110, Q120, A540

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Cite This Study

Bindoumou et al. (2026) studied this question.

synapsesocial.com/papers/69d8940c6c1944d70ce050cchttps://doi.org/10.1177/09713441261427198
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