Determinants of livelihood diversification intensity among smallholder farmers in North Wollo Zone, Ethiopia

Livelihood diversification is a key strategy through which smallholder households manage climatic, economic, and production risks. Existing studies in Ethiopia have examined rural households’ choice of livelihood strategies, yet far less attention has been paid to the intensity of diversification to explore the depth and balance of income portfolios, particularly in the North Wollo Zone. This study addresses that gap by examining livelihood diversification intensity among smallholder farmers in the North Wollo Zone of Ethiopia. Primary data were collected from 384 rural households using a multistage sampling procedure. Diversification intensity was measured with the Simpson diversity index (SDI) and analyzed using a fractional probit model. Results indicate that nearly two-thirds (65.89%) of surveyed households pursued additional livelihood activities alongside their principal livelihood sources. The diversification index in the study area was moderate (mean SDI = 0.278; observed maximum = 0.575). On-farm activities remained the dominant income source, while 48.4% and 45.6% of households participated in non-farm and off-farm activities, respectively. Econometric results show that mobile-phone ownership, credit use, and male household headship are positively associated with diversification intensity, whereas older age, larger landholdings, and irrigation use are negatively associated. Major constraints include limited access to finance, inadequate rural infrastructure, poor market access, and human-capital gaps (particularly in education and skills). The study recommends prioritizing rural credit and mobile-phone access, strengthening market linkages, and targeting women and asset-poor households to build more diverse and resilient livelihoods in the study area.