African Journal of Agricultural Research Vol. 6(11), pp. 2594-2608, 4 June, 2011 Available online at http://www.academicjournals.org/AJAR ISSN 1991-637X ©2011 Academic Journals Full Length Research Paper Can markets deliver the dual objectives of income generation and sustainability of natural resources in Uganda? P. N. Pali 1 *, S. K. Kaaria 2 , R. J. Delve 3 and B. Freyer 4 1 International Livestock Research Institute (ILRI), P.O. Box 30709 -00100, Nairobi, Kenya. 2 The Ford Foundation, Rahimtullah Tower, 12th Floor, Upper Hill Road, P. O. Box 41081 – 00100, Nairobi, Kenya. 3 Catholic Relief Services (CRS), Riverside Lane, P.O. Box 49675-00100, Nairobi, Kenya. 4 The University of Natural Resources and Applied Life Sciences (BOKU), Institute of Organic Farming, Gregor Mendel Strasse 33, A-1180, Vienna, Austria. Accepted 23rd August, 2010 In this study, we set out to determine whether strategies used to link farmers to markets resulted in household level livelihood and NRM impacts measured by the participation in the market and the value of sales from the markets. Farmer to market linkages have improved livelihoods in developing countries due to policy, institutional and implementation strategies, however, equal emphasis has not been placed on investments in Natural Resource Management (NRM). Areas with high market access have often been cited as the highest in soil nutrient depletion, while input markets and labour required for land management are scarce at community level. We established a higher human capacity through formal education and technical skills built through extension and training services provided by the institutional affiliation which enabled support to specific enterprise production. We also observed increased commercialization through increased number of crops sold to the market through more than one marketing channel, including food and cash crops which compete with one another. Investment in NRM was low despite increased income. Key words: Linking farmers to markets, natural resource re-investment, sample selection model, impacts, rural livelihoods. INTRODUCTION Much of sub-Saharan Africa faces the inter-related challenges of rural poverty and environmental degra- dation. The increasing interests in market orientation and special programs to support this, example, African Growth and Opportunity Act (AGOA), New Partnership for African Development (NEPAD) offer new opportunities for smallholder farmers in developing countries to alleviate poverty by increasing their income opportunities. However, this transition to market orientation is constrained by a range of bio-physical, economic and social factors at the household, and community level (Kaaria and Ashby, 2001). *Corresponding author. E-mail: p.pali@cgiar.org. Tel: +254700466450. Farmer to market (F2M) linkages plays a critical role in poverty alleviation in poor economies (Dorward et al., 2003; Sanginga et al., 2004; Canz, 2005). Smallholders can benefit directly from poverty alleviation through productivity gains, which result in higher incomes, and commercialization. They can also benefit from regional spill over benefits such as the agricultural contribution to growth, and the generation of economic opportunity in the non farm sector (Govereh et al., 1999; Warning and Key, 2002; Dorward et al., 2003; Govereh and Jayne, 2003). As a result, many African countries shifted their agricultural and rural development focus towards fiscal and economic reforms geared to the market driven approach to production in the 1980’s. These policy interventions have produced mixed results. Positive evidence that markets have an impact on rural poverty in Africa is widely published (Zeller et al., 1998;