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Abstract: Powerful forces of agrarian change are at work in western China while the government has stepped up efforts to “modernize” agriculture. Major components of the modernization process are to disseminate improved crop and livestock breeds and adjust changing agricultural structures including a shift from staple food crops to more specialized crop-livestock systems. This paper explores the changing role of agriculture and the impacts of new agricultural structures on household livelihoods through a detailed model of farm households. The model aids understanding of the complex dynamics and choices faced by farm households that consume much of their own food production but who are under great pressure to specialize and engage in more commercial activities both on- and off-farm. The model draws on detailed information and case studies in Tibet, a region that reflects the marginal productivity, ethnic diversity, rudimentary market systems and development challenges of much of western China. The model results demonstrate that even in the context of agrarian change, agriculture continues to play a significant role in the livelihoods of these Tibetan farm households. They also highlight how mooted specialization paths, despite significantly increasing household returns, fundamentally change the nature of these farm and household systems and risks faced by these households. The detailed modelling enables identification of tight labour constraints, feed gaps and other changes to farm and household systems brought about by the specialization. Such information is crucial in guiding refinements to marketing systems and institutional and policy settings needed to strengthen and smooth out the process of agrarian transition in western China. [Copyright &y& Elsevier]