How Climate Change Impacts Livelihoods: The Critical Relationship Explained

Climate change is not just an environmental crisis-it directly threatens how billions of people earn their living, feed their families, and sustain their communities. According to the IPCC’s Sixth Assessment Report, climate-related hazards, including extreme events and slow-onset changes, adversely affect livelihoods through reduced agricultural yields, destroyed homes, and lost income. Understanding the interrelationship between climate change and livelihoods is essential for developing effective adaptation strategies that protect the world’s most vulnerable populations.

What is a sustainable livelihood? 🔗

A livelihood encompasses more than just a job or income source. The UK’s Department for International Development (DFID) defines a livelihood as comprising the capabilities, assets, and activities required for a means of living. This includes everything from farming skills to social networks, from savings to access to natural resources.

For a livelihood to be considered sustainable, it must meet specific criteria. A sustainable livelihood can cope with and recover from stresses and shocks while maintaining or enhancing its capabilities and assets both now and in the future. Crucially, it must not undermine the natural resource base on which future livelihoods depend. This definition, originally developed by Robert Chambers and Gordon Conway in the early 1990s, remains foundational to understanding how people survive and thrive.

The concept recognises that people don’t simply need income-they need resilience. A farmer who grows diverse crops, maintains savings, has access to credit, and belongs to a supportive community network has a more sustainable livelihood than one who depends entirely on a single cash crop with no safety net.

The five forms of livelihood assets 🔗

The sustainable livelihoods framework identifies five essential categories of assets that people draw upon to build their lives and respond to challenges. These assets interact with each other in complex ways, and the balance between them determines how well households can weather difficulties, including those created by climate change.

Natural capital 🔗

Natural capital refers to the natural resource stocks from which resource flows and services useful for livelihoods are derived. This includes land, forests, water, fisheries, and biodiversity. For rural communities in developing countries, natural capital often forms the foundation of their entire livelihood system. Changes in rainfall patterns, soil fertility, or fish populations directly impact their ability to survive.

Social capital 🔗

Social capital encompasses the social resources people draw upon in pursuit of their livelihood objectives. This includes networks and connections (both horizontal relationships between peers and vertical relationships with patrons or institutions), membership in groups, and relationships of trust and reciprocity. Strong social capital can provide informal safety nets during crises, extend access to wider institutions, and reduce the costs of working together on shared challenges.

Human capital 🔗

Human capital represents the skills, knowledge, ability to labour, and good health that enable people to pursue different livelihood strategies. At the household level, human capital depends on household size, skill levels, leadership potential, and health status. Education and training build human capital, but so does accumulated local knowledge passed through generations.

Physical capital 🔗

Physical capital comprises basic infrastructure and producer goods needed to support livelihoods. Infrastructure includes transportation systems, secure shelter, water supply and sanitation, energy access, and communications. Without adequate infrastructure, human health deteriorates, and people spend excessive time on non-productive activities like collecting water and fuel.

Financial capital 🔗

Financial capital denotes the financial resources people use to achieve their livelihood objectives, including both stocks (savings, livestock as assets, jewellery) and regular inflows (wages, pensions, remittances). Though the most versatile asset-readily converted into other forms of capital-financial capital is typically the asset least available to the poor, making their other capitals essential substitutes.

The poverty-environment link 🔗

A critical connection exists between poverty and environmental dependence that makes climate change particularly threatening to the world’s poorest people. Approximately 70% of the world’s poor depend on natural resources for all or most aspects of their livelihoods. Among rural poor and forest-dwelling households, 50-90% of their total livelihood comes from ecosystem services and non-market goods like agriculture, forestry, livestock, and fisheries.

This direct dependence creates what researchers call poverty-environment traps. Poor communities often rely on marginal agricultural lands, common property resources like forests and fisheries, and climate-sensitive activities. When environmental conditions deteriorate-whether through land degradation, water scarcity, or ecosystem collapse-these communities face immediate livelihood threats with few alternatives.

Rural populations in developing countries face particularly acute vulnerability. They typically live in areas with limited access to markets and infrastructure, constraining their ability to improve farming systems or obtain off-farm employment. Their overreliance on marginal agricultural land and common resources often leads to stagnant, low incomes that cannot support investment in adaptation or diversification.

How climate change increases vulnerability 🔗

Climate change creates differential impacts across places and people. The World Bank reports that the 74 lowest-income countries emit just one-tenth of global greenhouse gases, yet they experience the most severe climate impacts. These countries have already faced approximately eight times as many natural disasters over the past decade compared to the 1980s.

Why developing nations face disproportionate risk 🔗

Several factors make developing nations particularly vulnerable to climate change impacts:

Geographic exposure: Many developing countries are located in tropical and subtropical zones that face intensifying extreme weather events including El Niño, La Niña, cyclones, and monsoon variability. Low-lying coastal areas, home to hundreds of millions in countries like Bangladesh and small island states, face existential threats from rising sea levels.

Economic dependence on climate-sensitive sectors: Agriculture serves as the predominant economic activity in South Asia, where around 70% of the population lives in rural areas. When farming depends on monsoon-fed irrigation and seasonal rainfall patterns, any disruption cascades through the entire economy.

Limited adaptation resources: Poor countries lack the financial capital, infrastructure, and institutional capacity to implement adaptation measures. While wealthy nations can build sea walls, develop early warning systems, and provide social safety nets, developing countries struggle with basic service delivery.

The compounding nature of climate impacts 🔗

Climate change rarely affects livelihoods through single, isolated events. Instead, multiple hazards often compound each other, creating cascading impacts that push vulnerable households into persistent poverty. A drought might reduce crop yields, forcing families to sell livestock to buy food. Then, without livestock as savings, they cannot purchase seeds for the next season, trapping them in a cycle of declining assets.

The 2025 Global Multidimensional Poverty Index reveals that almost all poor people in South Asia (99.1%) live in regions affected by at least one climate hazard, while 59% (226 million people) are exposed to three or four climate hazards simultaneously. This overlapping exposure means that recovery from one shock often becomes impossible before the next arrives.

South Asia: a region of heightened vulnerability 🔗

South Asia faces acute climate risks driven by dense coastal populations, heavy dependence on monsoon-fed agriculture, and rapid urbanisation. The region is home to approximately 1.8 billion people, with nearly a third still living below the poverty line despite relatively low greenhouse gas emission levels.

The devastating 2022 Pakistan floods exemplify the region’s vulnerability. The floods caused an estimated $15.2 billion in economic losses while creating rehabilitation and resilience needs of $16.3 billion. Such events destroy not only physical assets but also the accumulated human and social capital that communities depend upon.

Research indicates that almost half of the Indo-Gangetic Plains-the major food basket of South Asia-may become unsuitable for wheat production by 2050 due to heat stress. Even modest warming of 1.5-2°C can severely impact water availability due to increased monsoon variability and glacial meltwater, threatening agricultural production across multiple countries.

Climate-induced displacement and migration present additional challenges. Climate-induced displacement affects migrant workers, their families staying behind, and children from both situations-leading to education dropouts, increased workloads, malnutrition, and heightened vulnerability to exploitation. Women and children face particular health-related risks due to flooding and other climatic hazards.

Livelihood impacts across sectors 🔗

Climate change threatens livelihoods through multiple pathways affecting agriculture, fisheries, livestock, and off-farm employment.

Agricultural livelihoods 🔗

Populations in less-favoured agricultural areas-lands constrained by difficult terrain, poor soil quality, or limited rainfall-face the most severe and long-lasting climate impacts. These same areas often trap people in poverty due to limited access to markets and infrastructure. Climate change amplifies both environmental degradation and economic marginalisation simultaneously.

Lost agricultural income represents one of the key factors driving disproportionate climate impacts among poor households globally. When crops fail, families lose not only food but also income for school fees, healthcare, and investment in the next growing season.

Fisheries and coastal livelihoods 🔗

Climate change affects fish populations through altered water temperatures, ocean acidification, and changing marine ecosystems. Coastal communities dependent on fisheries face double exposure-their resource base shifts while their physical settlements become more vulnerable to storms, flooding, and sea level rise.

Pastoral and livestock systems 🔗

Between 200 and 500 million people practice pastoralism worldwide, and pastoralism remains central to livelihood strategies in the drylands and mountainous regions of East Africa. Climate change threatens grazing lands, water sources, and animal health while political marginalisation often restricts the mobility that pastoralists have traditionally used to cope with environmental variability.

Building climate-resilient livelihoods 🔗

Addressing the climate-livelihood relationship requires integrated approaches that strengthen all five forms of livelihood assets while addressing the structures and processes that shape how people can use those assets.

Diversifying livelihood strategies: Households that can draw on multiple income sources prove more resilient to climate shocks. Supporting agricultural diversification, off-farm employment, and migration as an adaptation strategy can expand options for vulnerable communities.

Strengthening social capital: Community-based adaptation approaches that mobilise local knowledge, build collective action capacity, and create mutual support networks help communities respond to climate challenges more effectively than isolated individual efforts.

Investing in human capital: Education, training, and health services build the capabilities people need to adapt. Climate information services and early warning systems represent targeted investments in climate-relevant human capital.

Protecting and restoring natural capital: Sustainable land management, ecosystem restoration, and improved resource governance can maintain the environmental foundations of rural livelihoods while building resilience to climate impacts.

Expanding financial inclusion: Access to savings, credit, and insurance services helps households manage climate risks, invest in adaptation, and recover from shocks without depleting productive assets.

The path forward 🔗

The interrelationship between climate change and livelihoods demands that climate action be understood as development action. Without intervention, more than 130 million people living in the most vulnerable countries could be pushed into extreme poverty due to climate change by 2030.

Effective responses must address both immediate climate impacts and the underlying vulnerability that makes those impacts so damaging. This means tackling poverty, inequality, and exclusion alongside emissions reductions and adaptation measures. It also requires ensuring that climate responses themselves do not inadvertently harm the poorest-a risk known as maladaptation that can occur when interventions fail to consider the complex livelihood strategies of vulnerable communities.

Understanding livelihoods through the sustainable livelihoods framework reveals that climate change is not simply an environmental problem requiring technical solutions. It is fundamentally a challenge of ensuring that all people can build and maintain the capabilities, assets, and activities needed to live with dignity in a changing world.

What do you think? How are communities in your region already adapting their livelihood strategies to respond to climate changes? What role should local knowledge play alongside scientific approaches in building climate-resilient livelihoods?

References

1. https://www.ipcc.ch/report/ar6/wg2/chapter/chapter-8/
2. https://www.livelihoodscentre.org/-/sustainable-livelihoods-guidance-sheets
3. https://earth.org/climate-changes-unequal-burden-why-do-low-income-communities-bear-the-brunt/
4. https://www.weforum.org/stories/2023/01/climate-crisis-poor-davos2023/
5. https://www.nature.com/articles/s41599-024-02847-3
6. https://www.downtoearth.org.in/climate-change/almost-all-poor-people-in-south-asia-exposed-to-one-or-more-climate-shocks
7. https://blogs.worldbank.org/en/endpovertyinsouthasia/south-asia-rising-to-the-challenge–from-climate-vulnerability-t
8. https://link.springer.com/article/10.1007/s10668-019-00414-4
9. https://link.springer.com/article/10.1007/s44282-025-00237-x
10. https://www.journals.uchicago.edu/doi/full/10.1093/reep/rex023
11. https://www.europarl.europa.eu/doceo/document/A-9-2021-0115_EN.html
12. https://www.worldbank.org/en/news/feature/2023/12/02/for-the-poorest-countries-climate-action-is-development-in-action