Poverty and the Environment Understanding Linkages at the Household Level Kirk Hamilton The 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 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 births1227

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

Environmental income

Environmental income as percent of total income Resource- rich areas Resource- poor/ low- access areas Average StudyPoorRichPoorRichPoorRich Jodha (1986)9–261–4 Cavendish (2000)4430 Vedeld and others (2004) 3217 Narain, vant Veld, and Gupta (2005) Chettri-Khattri (forthcoming)

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 resources Complementary 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

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