POVERTY-ENVIRONMENT NEXUS

Ashish BharadwajM.Sc.Economics (I)

Madras School of Economics

Questions posed:

• How do environmental factors impact the lives of the poor and the poverty reduction efforts?

• How environmental degradation is capable of accentuating poverty?

• How to reduce the environmental price of economic growth and consequently poverty alleviation?

Some Statistics…• India ranks 101st out of 146 countries in

Environmental Sustainability Index (Esty, 2005)• Ranks 5th in terms of GHG emissions (WRI, 2005)• Ranks 109th in terms of ecological footprint

(WWF,2006)• P.c availability of forestland is 0.0747 ha-lowest

in the world-against the 0.5 ha for LDCs (SFR, 2003)

• Dense forest shrinking in almost all the major States (SFR,2003)

• >57% of total geographical area degraded (Sehgal & Abrol, 1994)

Poverty-Environment Linkages

• Natural Resource degradation, if not checked, will result in large-scale poverty & destitution, and can hamper the very process of socio-economic development (Nandkarni 2000, Agarwal 1995))

• Environment Degradation impacts the poor much more than the better off (greater dependence, limited assets, vulnerability to disasters)

• Rural women are disproportionately affected by natural resource degradation (B. Agarwal, 1995)

• Concentration of the poorest groups in perhaps the ecologically most fragile areas implies greatest risk to their welfare

Two key dimensions of poverty and Natural Resource degradation

1. Livelihoods 2. Health

Livelihoods• Extreme vulnerability of the poor in relation to

water scarcity (Vidharbha case study by Devasia, 1998)

• Large population on the Indian Coast depends primarily on fishing for livelihood and nutrition. However during the last two decades, availability of natural resources has eroded severely (UNWRI, 1998) possibly due to:

a) Unsustainable extraction of fuelwoodb) Premature & destructive harvesting of NTFPsc) Unregulated grazing & recurring fires

Forest dependence and Poverty

Region 1 Displacement of directly dependent inhabitants

Deforestation

Makes them destitute migrants

Non-availability of other lands for subsistence

Region 2Lack of employment opportunities

Increase in Poverty

• Forests play an important role in the socio-economic lives of people in India.

• Source of meeting daily needs such as timber, fodder, industrial products, medicinal products and various kinds other NTFPs

• However dense forest in almost all major States has been declining (urbanization, agricultural land)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Fore

st C

over

(in

hect

ares

)

AP MP UP OrissaStates

Forest Cover of Major States in India (1987-2001)

1987

1995

2001

Source: SFR, 2003

Environmental Health

• EH refers to those aspects of human health, including quality of life, that are determined by physical, biological, social and psychological factors in the environment.

• Both poverty and environmental degradation ,via independent ways, jeopardize well being and health.

Environmental Health

Traditional Hazards such as lack of safe water, inadequate sanitation & waste disposal and vector borne diseases

Modern Hazards such as urban air pollution and exposure to agro-industrial chemicals & waste

Poverty and lack of development

Development that lack environmental safeguards

Burden of Disease from Major Environmental Risks (% of all DALY’s)

India Asia Pacific All LDC’s

Water Supply & Sanitation

9 8 7

Vector Diseases 0.5 1.5 3

Indoor Air Pollution 6 2 4

Urban Air Pollution 2 5 2

Agro-Industrial Waste 1 1 1

All Causes 18.5 17.5 18DALY: Disability Adjusted Life YearsSource: Murray & Lopez 1996; Smith 1993, 1998, 1999 ; WHO 1997 ; WDI 1999 ; World Bank Staff in World Bank 2000a

Environmental Health Groups

E Vs. Dnvironmental

conomic

egradation

evelopment

•First empirical evidence for an inverted U-shaped relationship between certain pollutants and income (Grossman & Krueger, 1993)

•Labeled by Panayotou (1995) as the ‘Environment Kuznet Curve’ (EKC)

Phase 2Phase 1 Phase 3

GDP/capita

Environmental Pressure(EP)

• Empirical research suggests that air and water pollution increases with development until pc income reaches a range of $5000 to $8000-the turning point (Dasgupta et.al 2005)

• Per capita GDP of India in 2002 (in PPP dollars) was $2572 (WRI, 2005)

• Except Bihar, all States in India are on the upward sloping part of the EKC (Mukherjee & Kathuria 2006)

• This implies substantial increases in pollution during the next few decades.

Economic growth as a means to alleviate poverty

• EG-One of the necessary factors if not the only factor to tackle the problem of poverty

• Without it, poverty alleviation involves redistribution from the better-off to the poor

• Redistribution solution is therefore simply impossible (cake is not big enough to provide for all, no matter how thinly slices are cut)

• Economic growth increases the size of the cake to give everybody at least a decent slice without having to reduce the size of the larger slices

Trade-offs faced by Governments

• Industrial development creates employment and incomes for poor but may also have various adverse impacts

• Food supply can be increased by converting a forest to agricultural land but it may lead to decrease in supply of otherservices (clean water, timber,drought control)

• Alleviating poverty and conserving environmental resources pose a major economic and moral challenge

• Environmental Degradation is a major issue with poor local communities-evident from growing conflicts.

• Restricting access through changes in property rights likely to increase poverty (Reddy & Chakravarthy, 1999)

• Where their exists policy distortions, deterioration of environment (at low income levels) per unit of pc GDP rise is higher than it would be otherwise(Panayotou, 1997)

• Improvement of the environment with income growth is not automatic-it depends on appropriate policies (mix of pro-poor policies with environment conservation techniques)

• GDP growth creates conditions for environmental improvement by raising the demand for improved environment quality.

Policies and markets determine the ‘environmental price’ of growth and consequently poverty alleviation.

GDP/capita

Environmental Pressure (EP)

PRs ill defined, externalities not internalized, resource use and pollution subsidized

Environmentally harmful subsidies removed

Subsidies removed, externalities internalized, PRs defined

a) More secure PRs over resources b) Participatory resource management involving local communities

and public agencies.c) Pollution taxesd) Vouchers (such as carbon credits)e) Effective regulation and enforcement of controlsf) Generating awareness of ecological & economic impacts of

natural resource depletion

Some possible policy suggestions:

QUESTIONS….

THANK YOU