Poverty and the Environment

Understanding Linkages at the Household Level

Kirk HamiltonThe World Bank

Motivation

Are poverty reduction and environmental management mutually reinforcing?The development community has invested a

lot in both of these Does environmental management

contribute to poverty reduction?Poverty has multiple dimensions, including

health status, income and consumption

The macro picture

Low income countries

High income countries

Share of natural resources in total wealth %

29% 2%

Population per sq. km. of forest 324 104

Deforestation rate (% per year) 0.5% -0.1%

Access to improved water source (% of population)

75% 99%

Access to improved sanitation (% of population)

36% ..

Under-5 mortality per 1000 live births 122 7

Understanding the micro level

Concentrating on the household level gives direct evidence of environmental impacts on human welfare

Understanding impacts implies that interventions and policy reforms can be better designed

Poverty-Environment Linkages at the Household Level

Returns to Assets

Shocks

Natural Capital

Human Capital

HealthProduced

Capital

En

vironmental

Change

Po

licy and other

changes

HouseholdWelfare

HouseholdAssets

Poverty-Environment Linkages at the Household Level

Returns to Assets

Shocks

Natural Capital

Human Capital

HealthProduced

Capital

En

vironmental

Change

Po

licy and other

changes

HouseholdWelfare

HouseholdAssets

Environmental income

Environmental income as percent of total income

Resource-rich areas

Resource-poor/ low-

access areas

Average

Study Poor Rich Poor Rich Poor Rich

Jodha (1986) 9–26 1–4

Cavendish (2000) 44 30

Vedeld and others (2004)

32 17

Narain, vant Veld, and Gupta (2005)

41 23 18 18

Chettri-Khattri (forthcoming)

20 14 2 1

Resource dependence and income growth

Vedeld et al. (2004) find that use of environmental resources rises 1% for each 1% rise in income

Policy implications:Poverty reduction may not directly reduce

pressure on natural resourcesComplementary resource management

reforms may be needed

Environment and health

Empirical regularities

Child mortality is strongly linked to safe water, clean cooking fuels

Positive externalities exist for community coverage of water supply and sanitation

The nutritional status of children (stunting and wasting) is linked to environmental factors via diarrheal disease

Policy implications

Health outcomes are linked to environmental factors as well as health interventions

Targeting water and sanitation to poor communities can be effective because of the positive externalities linked to coverage

Female education and access to health information is important in reducing child mortality

Policy reforms

Policy reforms

1. Creating rights to common property resources

Namibia community conservancies, Nepal forest user groups

2. Strengthening private property rights Increasing tenure security in Guizhou

increased land investments by 2.8 times

3. Creating incentives for better management

Irrigation management transfer in the Philippines

Policy reforms

4. Participation in novel markets Nicaragua payments for environmental

services: moderately poor households had higher participation than the non-poor

5. Increasing access to services Argentina water privatization – increased

access to safe water decreased child mortality by 5 percent

Overall conclusions

The poor depend on the environment as a source of income

Environmental factors affect the health of poor households

Policy reforms in the natural resource / infrastructure sectors can yield welfare benefits

Need for better data