Rural households in the Peruvian highlands are among the poorest in the country: 60 per cent of this population lives in poverty, and 32 per cent in extreme poverty (UNDP, 2002). Rural households define their livelihood strategies according to the geographic and climatic conditions in which they live, as well as the social, economic and cultural needs and opportunities. They diversify their portfolio of activities to use their limited resources efficiently to deal with poverty, to ensure consumption during shocks or to improve their living conditions (Morduch, 1995; Valdivia et al., 1996; Ellis, 1998; Valdivia and Gilles, 2001). Diversification on the farm is not always possible. It depends on geographic location, environmental characteristics, and labour availability. The Altiplano is a plateau between two mountain ranges in the southern region of the Andes of Peru. Climate conditions are difficult, and the Altiplano landscape is not homogeneous. It presents several agro-ecological zones and geographical characteristics, and climatic conditions that vary according to distance from Lake Titicaca and altitude (Sperling et al., 2008). Rural households defined as agriculturalist, who rely on crops and livestock and live near the lakeside, enjoy quite favourable climatic conditions. Their proximity to markets reduces participation costs. Their farming systems are mixed, producing crops and livestock for consumption and sale, with more opportunities to diversify within agriculture. Pastoralist households of the dry puna1 zone, located in the highest and remote areas, face more difficult climatic conditions and exclusively graze livestock for the market. They have little or no opportunity for diversification, due to the high elevation and type of land they access. They are more vulnerable to market and climate changes and food insecurity and have fewer development opportunities. Households of both zones intensify their activities during the rainy season, a period of high on-farm labour demand.