Social-protection programmes like the Productive Safety-Net Programme
(PSNP) in Ethiopia can play a positive role in promoting livelihoods and
enhancing risk management. This article uses propensity score matching to
estimate its effect on income diversification. The results suggest that receiving
transfers from the PSNP, on average, did not increase farm or non-farm
income but significantly increases natural-resource extraction (one
component of off-farm income). While these results should be treated with
caution, they suggest that the PSNP may not be helping smallholders diversify
income sources in a positive manner for climate adaptation. The article
concludes by arguing for the promotion of positive forms of income
diversification and the further investigation of the PSNP’s influence on
autonomous adaptation strategies.