Poverty, Inequality and Environmental Resources: Quantitative Analysis of Rural Households

Rural households have been suspected to rely heavily on goods and services freely provided by environmental resources. However, there has been no adequate quantitative analysis of this issue due to a lack of appropriate household data sets encompassing economic and environmental data. We use a purpose-collected 213 household data set from rural Zimbabwe to investigate the impact of incorporating this missing source of household welfare on quantitative analysis of the measurement and causes of rural poverty and inequality. Incorporating environmental income in the household accounts results in dramatic and significant reductions in measured poverty, 50 percent or more over income as conventionally measured. Environmental income is also strongly and significantly equalising, bringing about roughly a 30 percent reduction in measured inequality. So access to commons resources has a substantial impact on poverty and inequality. However, including the value of environmental utilisations leaves analysis of the causes of rural differentiation unchanged: these resources do not alleviate the poverty trap. Acknowledgements: I am grateful to Harold Alderman, Simon Appleton, Tim Besley, Chris Heady, John Hoddinott, John Muellbauer, Christophe Muller, Francis Teal and to seminar participants in Oxford and Washington for comments, and to the Economic and Social Research Council and the Centre for the Study of African Economies, Oxford, for funding the research.