remote and/or are characterized by disadvantageous agro-ecological conditions, lack of infrastructure, low human capital might require relatively large per-capita investments in tangible and intangible assets, with relatively low returns in the short-term (Start 2001; Reardon and others 2001). This implies that national and local governments need explicit <u>growth and/or poverty reduction objectives to carry out targeted investments effectively. It also implies the need to recognize potential growth-efficiency-equity trade-offs.</u> Ultimately, we are concerned with **outcomes** that reflect household well-being and prospects for growth over time.<sup>21</sup> Household well-being is multi-dimensional, and some of these dimensions are admittedly very difficult to quantify and measure (World Bank 2000). Since income and consumption are more easily measured and generally correlate well to other indicators of well-being, they tend to be the primary indicators used, especially in the quantitative analyses. Non money-metric approaches can be found, but usually the indicators are tied back to the concept of poverty using a money-metric baseline (Glewwe and van der Gaag 1988).

However, different measures of well-being can be used to measure outcomes to reflect economic, social and environmental outcomes that can be material and/or non-material in nature. See box 2.11.

# **Box 2.11 Well-Being and Assets**

The 2003 World Development Report states: “Greater productivity and prosperity depend on improvement of many dimensions of well-being – both material wealth and the nonmaterial aspects of personal and social welfare. Improving well-being, so defined, requires management of a diverse portfolio of assets – physical, human, financial, social, natural, and intellectual (World Bank, 2002e, p.6) (emphasis by author) More attention is being devoted in the development literature to multi-dimensional economic, social and environmental measures of well-being (Moser 1998; Carney and others 1999; Coudouel and Hentschel 2000; Narayan and others 2000). Poor rural households are also concerned about food security, health status, vulnerability in general, empowerment and self-esteem, participation in community affairs, environmental quality, and hopefulness towards the future (Carney and others 1999; Narayan and others 2000). Such measures of well-being are not easy to obtain and quantify, necessitating the use of <u>participative methods and qualitative analyses.</u> Poverty tends to be a transitory state for many households and that there is a tendency to move above and below the poverty line. That is, many households are **_vulnerable to poverty_** because of changing asset-context conditions and livelihood strategies (Siegel and others 2003; World Bank 2001). Changes in well-being may be concentrated along certain points of the distribution of well-being (not just below the poverty line), and public policy should be designed to improve well-being for broad segments of society –

> 21 In addition to outcomes related to household well-being, it is possible to use the asset base approach to consider how the asset-context-livelihoods interface generate other outcomes, such as environmental impacts that are external to the household’s well-being (e.g., down-stream pollution) but have an impact on social welfare and sustainability. This requires additional types of data and analysis.

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