Livelihood strategies and the role of forest income in participatory‐managed forests of Dodola area in the bale highlands, southern Ethiopia

To describe livelihood strategies in the context of a participatory forest management arrangement in the Bale highlands of southern Ethiopia, data were collected using four quarterly household income surveys and a focus group discussion. A principal component analysis followed by cluster analysis was used to establish typologies of households based on livelihood strategies. The result distinguishes five livelihood strategies with different outcomes and levels of livelihood diversification. Both the poorest and the better‐off households pursue diversified strategies. However, in terms of income level and food security, business‐based and crop‐based strategies have better outcomes. Forest income is an important source of cash income and particularly for low income groups it provides opportunity to diversify their livelihoods. Household characteristics such as age of household head and possession of cropland together with geographical factors like altitude and distance from market were found to be the most important determinants of livelihood strategy choices. Implications of the results for policy and poverty alleviation are discussed.