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Abstract
Rural households in sub-Saharan Africa face many risks and are therefore often vulnerable to
poverty. Income diversification has been proposed as a potentially effective strategy to
mitigate their risks. This paper explores how portfolio decisions of fishery-dependent
households in Cameroon affect income and risk in different production systems. Data on
income variation across time were elicited using the visual impact method. Portfolio theory
and stochastic dominance rules were used to derive and compare income distributions. The
results show a considerable variation in incomes despite diversification into crops or fishing.
We conclude that any combination of cropping (sorghum, millet, rice) and fishing is not
effective in reducing risk as long as the dependency on climate remains strong (resulting in
high covariance of production output). We show that development intervention strategies that
aim specifically at changing the co-variation structure of income flows are the most
successful in reducing risk and potentially increasing income.