Does Displacement Hurt Informal Risk Sharing? Evidence from Nepal

Informal networks are essential risk-coping mechanisms for people living in impoverished communities. However, the consequences of displacement on informal institutions have received limited attention. Our study of displaced indigenous households from the Shuklaphanta Wildlife Reserve in Nepal indicates that displacement followed by an inadequate land compensation scheme led to serious household partitions and adversely affected patrilineal kinship relationships. Moreover, poor harvests in the resettled communities and growing conflicts over the control of limited land gradually destroyed the traditional patron–client system that governed permanent agriculture. Overall, the erosion of informal risk-coping mechanisms has created a vicious cycle of poverty.