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A decade ago, the streams running through a coffee-farming region of northern Nicaragua were polluted with runoff from fields and processing operations. Towns downstream feared for their water supplies. Ten years later, not only are local officials and residents protecting those streams, but the economy is slowly diversifying and prospects for growth look brighter.

That makes the area a rarity in rural Latin America. A survey of the region’s 10,000 rural districts found just 12% were growing economically while reducing poverty and inequality. A network of researchers from around the region set out to determine why these districts were able to develop equitably. They found six factors that spelled the difference between advancement and stagnation:

  • reasonably equitable land distribution and availability of natural resources
  • access to markets
  • a diversified economy
  • government investment in infrastructure and services
  • proximity to mid-size cities
  • a diverse local stakeholder coalition

These factors “are key elements that allow a rural territory to grow with greater social inclusion and environmental sustainability,” says Julio Berdegué, principal researcher of the Latin American Centre for Rural Development (Rimisp). A long-time IDRC partner, Rimisp carried out the study as part of its Rural Territorial Dynamics program.

Safeguarding water in Nicaragua

While different combinations of these factors emerged in the surveyed districts, the existence of a stakeholder coalition appears to be crucial.

In northern Nicaragua, local governments, coffee farmers, and other organizations came together to protect natural resources in the steep, rugged cloud forest called Macizo de Peñas Blancas, or “white rock mountain.”

That area “is the only source of clean, safe water for the towns,” says Ligia Gómez of Nitlapan, a development research centre at the University of Central America, who led the Rimisp case study there.

Concern about the scarcity of clean water brought the various stakeholders together to develop a management plan for the region’s natural resources. Safeguarding water, in particular, is crucial for maintaining the local economy, which is based on coffee exports.

By virtue of their exports, farmers account for another success factor: access to markets. They are also diversifying their crops – a third factor – to expand market opportunities.

It took three years to develop the management plan for Peñas Blancas and several more to win approval from local governments, says Edgard Castillo, executive director of the Centro de Entendimiento con la Naturaleza, which helped lead the effort.

Diversifying the economy in Ecuador

Another stakeholder coalition — mainly government agencies, small farmers, and small-scale manufacturers — has helped to promote a thriving and diverse local economy in Tungurahua, central Ecuador.

The area benefits from several more Rimisp factors for success. The break-up of large landholdings in the mid-20th century helped create more equitable land distribution in the region. As well, government investment in irrigation, roads, and education helped small farmers gain a foothold.

But farming alone could not drive the local economy, according to Pablo Ospina, who led the Ecuadorean case study. Families diversified their activities, setting up small manufacturing or handcraft workshops along with their farms. Unlike Peñas Blancas in Nicaragua, where there are no nearby cities and most production is for export, medium-sized urban areas in Tungurahua provide important market opportunities for rural families, creating a diverse economy based on local trade.

And as Ospina points out, women play an essential role in those businesses, experimenting with new products and venturing into new markets.

Guideposts, not a recipe

With different locations and histories, Peñas Blancas and Tungurahua reflect very different combinations of the key success factors identified by Rimisp. That is one of the research’s most important lessons.

“There’s not a recipe — there are many combinations,” says Berdegué. Nevertheless, the factors are important guideposts for policymakers seeking to reduce poverty and inequality.

For researchers and policymakers, says Berdegué, the findings “open a thousand more doors.”

Barbara Fraser is a freelance journalist based in Lima, Peru.

Top image: Scott Wallace / World Bank