ENDING to leave no one behind one no leave to Sustaining livelihoods Sustaining IN RURAL AREAS EXTREME POVERTYEXTREME

ENDING EXTREME IN RURAL AREAS FAO

ENDING to leave no one behind one no leave to Sustaining livelihoods livelihoods Sustaining 310274 CA1908EN/1/10.18 IN RURAL AREAS RURAL IN 9251 EXTREMEPOVERTY 8 978-92-5-131027-4 97 ISBN Sustainable Development Goal 1, ending poverty in all its forms, Agenda. This Goal , is the most ambitious goal set by the 2030 everywhere poverty in the next 12 years, which will includes eradicating extreme interventions. in addition to broad-based focused actions more require the 1.1 and overcome The question is: How can we achieve target of a deeper understanding many challenges that lie ahead? By gaining in particular, poor rural and the characteristics of the , those most in need. reach the right policies can be put in place to food systems the contribution that agriculture, presents This report the can make to securing and the sustainable use of natural resources in our world. who struggle livelihoods of the millions of poor people This report is primarily directed towards decision-makers responsible for designing and implementing national policies and programmes to achieve Sustainable Development Goal 1 (No poverty) and in particular Target 1.1 on eradicating extreme poverty by 2030. It will also be of value to development partners, public and private actors, including investors, researchers and technical practitioners, involved in the broad area of food and agriculture, and . Building on FAO’s mandate to achieve Zero hunger, No poverty and sustainable management of natural resource, this publication presents how agriculture, food systems and sustainable management of natural resources can accelerate the achievement of Target 1.1 in rural areas. ENDING EXTREME POVERTY IN RURAL AREAS

Sustaining livelihoods to leave no one behind

Prepared by Ana Paula de la O Campos, Chiara Villani, Benjamin Davis and Maya Takagi

FOOD AND AGRICULTURE ORGANIZATION OF THE Rome, 2018 Required citation: Under the terms of this licence, this work may be copied, redistributed and adapted for non-commercial purposes, provided De La O Campos, A.P., Villani, C., Davis, B., Takagi, M. 2018. that the work is appropriately cited. In any use of this work, there Ending extreme poverty in rural areas – Sustaining livelihoods to leave should be no suggestion that FAO endorses any specific organization, no one behind. Rome, FAO. 84 pp. Licence: CC BY-NC-SA 3.0 IGO. products or services. The use of the FAO logo is not permitted. If the work is adapted, then it must be licensed under the same or equivalent Creative Commons license. If a translation of this work is created, it must include the following disclaimer along with the The designations employed and the presentation of material required citation: “This translation was not created by the Food in this information product do not imply the expression of any and Agriculture Organization of the United Nations (FAO). FAO is opinion whatsoever on the part of the Food and Agriculture not responsible for the content or accuracy of this translation. Organization of the United Nations (FAO) concerning the legal The original [Language] edition shall be the authoritative edition. or development status of any country, territory, city or area or Disputes arising under the licence that cannot be settled amicably will of its authorities, or concerning the delimitation of its frontiers be resolved by mediation and arbitration as described in Article 8 of the or boundaries. The mention of specific companies or products of licence except as otherwise provided herein. The applicable mediation manufacturers, whether or not these have been patented, does not rules will be the mediation rules of the World Intellectual Property imply that these have been endorsed or recommended by FAO in Organization http://www.wipo.int/amc/en/mediation/rules and preference to others of a similar nature that are not mentioned. any arbitration will be in accordance with the Arbitration Rules of the The views expressed in this information product are those of the United Nations Commission on International Trade Law (UNCITRAL). author(s) and do not necessarily reflect the views or policies of FAO. Third-party materials. Users wishing to reuse material from ISBN 978-92-5-131027-4 this work that is attributed to a third party, such as tables, figures or images, are responsible for determining whether permission © FAO, 2018 is needed for that reuse and for obtaining permission from the copyright holder. The risk of claims resulting from infringement of any third-party-owned component in the work rests solely with the user.

Sales, rights and licensing. FAO information products are available on the FAO website (www.fao.org/publications) and can Some rights reserved. This work is made available under the Creative be purchased through [email protected]. Commons Attribution-NonCommercial-ShareAlike 3.0 IGO licence Requests for commercial use should be submitted via: (CC BY-NC-SA 3.0 IGO; https://creativecommons.org/licenses/ www.fao.org/contact-us/licence-request. Queries regarding rights by-nc-sa/3.0/igo/legalcode). and licensing should be submitted to: [email protected]. Contents

Acknowledgements v

Executive summary vii

1. Introduction 1

2. Understanding the extent of the challenge in rural areas 3

3. Characterizing the rural extreme poor: what challenges do they face? 12

4. Ending extreme poverty in rural areas: some important considerations 30

5. Key elements in countries’ strategies for ending extreme poverty 38

6. Sustaining livelihoods: how can agriculture, food systems and sustainable management of natural resources accelerate the achievement of Target 1.1 in rural areas? 51

References 60

iii ENDING EXTREME POVERTY IN RURAL AREAS

Figures Figure 14. Coverage of social protection and labour in total population (%) 25 Figure 1. Comparison of the headcount ratios of MPI poor, Figure 15. for Indigenous vs non-indigenous 27 MPI destitute, and extreme poverty measure of USD 1.90/day 6 Figure 16. Top country concentration of extreme poverty in LICs and LMICs 32 Figure 2. Share of the population by and residential sector 8 Figure 3. Share of extreme poor, moderate poor and non-poor in urban and rural areas 8 Boxes Figure 4. Changes in proportions of rural and urban extreme poor, moderate poor, and non-poor, in total population of Box 1. What do and Brazil have in common? 39 selected countries, by region, 1990s–2010s 9 Box 2. Investing in food systems and promoting skills Figure 5. What happens to people who escape development for better employment opportunities extreme poverty 11 in rural areas 42 Figure 6. Mean consumption for the developing world 11 Box 3. Cash transfers: myths vs. reality 44 Figure 7. Undernourishment and extreme poverty Box 4. Linking social assistance to development interventions 46 rates generally correlate at the country level 13 Box 5. India: the National Rural Livelihoods Mission 48 Figure 8. Prevalence of stunting in children under five, by household income 15 Box 6. PROEZA: an integrated approach to fight extreme poverty and climate change 57 Figure 9. Types of agroecological systems and levels of urbanization 16 Figure 10. Share of rural workers by employment sector and welfare 17 Tables Figure 11. Share of total income from main income generating activities (Africa) by expenditure quintile 18 Table 1. Proportion of smallholders (rural areas only) that are poor 21 Figure 12. Share of total income from main income generating activities (Non -Africa) by expenditure quintile 19 Table 2. Distribution of rural people living on less than USD 1.25 per day and residing in or around Figure 13. Income from fisheries in tropical forests and savannahs 21 by income group 22

iv Acknowledgements

his report was prepared Panel of internal reviewers by the FAO Strategic Programme to Reduce Rural Ould Ahmed Abdessalam (FAORNE), Poverty (SP3). Under the Jacqueline Alder (FIAM), Alejandro Toverall guidance of Kostas Stamoulis Acosta (AGAL), Melisa Aytekin (ADG-ES), the direction of the (FAORAF), Manuel Barange (FIA), publication was carried out by Ana Pierre Marie Bosc (CBL), Diop Bouna Paula de la O Campos, Chiara Villani, (AGAH), Clayton Campanhola (SP2), Benjamin Davis and Maya Takagi. Marco Sanchez Cantillo (ESA), This report has been possible thanks Francisco Carranza (DPSL), Rene to the contributions of the several Castro (CBD), Vito Cistulli (ESP), technical areas and regional and country Michael Clark (ESD), Piero Conforti offices of FAO, as well as the valuable (ESS), David Conte (SP3), Ileana contribution of external peer reviewers. Grandelis (ESP), Maja Gravilovic (ESP), Driss Haboudane (AGE, FAO contributors FAO-IAEA), May Hani (ESP), Guenter Hemrich (ESN), Msahiro Verdiana Biagioni Gazzoli, Nigussie Igarashi (OED), Justin Jannolo (ESP), Tefera, Natalia Winder Rossi, Akiko Kamata (AGAH), Elizabeth Jim Hancock, Julius Jackson, Ahmad Koechlein (ESP), Maria Hernandez Sadiddin, Raffaele Bertini, and Sara Vas. Lagana (CBL), Erdgin Mane (ESP), Alberta Mascaretti (TCIA), Norman External contributors Messer (TCI), Jaimie Morrison (SP4), Eva Muller (FOA), Clara Park Subramanyam Vidalur Divvakar (FAORAP), Francesco Pierri (DPSA), (independent consultant), and Pamela Pozarny (FAORAF), Ahmed Julian May, Anthea Dallimore Raza (ESN), Beate Scherf (SP2), and Darryn Durno from SADC Libor Stloukal (ESP), Andrew Taber Research Centre, South Africa. (FOA), Carlos Tarazona (OED),

v ENDING EXTREME POVERTY IN RURAL AREAS

Florence Tartanac (ESN), Lisa Administrative support Van Dijck (ESP), Samuel Varas (CIO), Verena Wilke (AGP). Rosa Capuzzolo, Isabella Clemente.

Panel of external reviewers Support for report production was provided by Chiara Villani, Denise Aude de Montesquiou, Alessandra Martinez, Jennifer Gacich (editing), Marini, Ruth Hill and Ambar and Studio Bartoleschi (layout). Narayan from the Group (WBG). Andrew Shepherd and Vidya Diwakar, from the Chronic Poverty Advisory Network (CPAN), Oversees Development Institute (ODI). Amson Sibanda from United Nations Department of Economic and Social Affairs (UNDESA). Stephen Devereux, from the Institute for Development Studies (IDS). Jose Cuesta from the United Nations Children’s Fund (UNICEF) Innocenti Research Center. Leopoldo Tornarolli from Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS). Subramanyam Vidalur Divvakar (independent consultant). Fabio Veras Soares from International Policy Center for Inclusive Growth (IPC-IG).

vi Executive summary

ustainable Development Understanding the challenge Goal 1, ending poverty in of ending extreme poverty all its forms, everywhere, is the most ambitious In 2015, about 736 million people – Sgoal set by the 2030 Agenda. about 10 percent of the global This Goal includes eradicating population – were living in extreme extreme poverty in the next poverty. Though considerable progress 12 years. The question is: How has been made over the last three can we achieve target 1.1 and decades in reducing extreme poverty overcome the many challenges and overall poverty, the welfare level that lie ahead? By gaining a of those who have remained at the deeper understanding of poverty, bottom of the income or consumption and the characteristics of the distribution has stayed the same. extreme rural poor in particular, Those who have been “left behind” the right policies can be put in face greater vulnerabilities and place to reach those most in need. structural constraints, which prevent Agriculture, food systems and them from benefiting from overall the sustainable use of natural economic growth and development. resources are key to securing the livelihoods of the millions of poor The extreme poor are defined as people who struggle in our world. those individuals earning less than USD 1.25 a day. However, extreme poverty is complex. It is revealed through social marginalization and exclusion, different manifestations of , poor living conditions, lack of access to basic services, resources and employment opportunities, and more. Often, the

vii ENDING EXTREME POVERTY IN RURAL AREAS

rural extreme poor (like the urban Numerous constraints however, poor) are “hidden” in non-poor impede their economic inclusion in families due to intra-household various sectors, such as insufficient dynamics and inequality, which access to basic is the case for many rural women (e.g. water, electricity, sanitation, and children. Multidimensional and roads), and inadequate access to poverty measures help provide public services (e.g. health, , insight into the varying degrees of connectivity, and markets). deprivation and vulnerability of the extreme poor, thus complementing There are also great disparities income and consumption-based among the extreme poor in poverty measures. rural areas. The rural extreme poor are often geographically Most of the extreme poor – about concentrated in marginal rural 80 percent – live in rural areas. areas – e.g. high mountain, pastoral, The rural extreme poor are different arid, rainforest jungle, small islands from the urban extreme poor and – with low population densities, the non-poor. Their depend poor agroecological endowments, greatly on agricultural activities, limited access to markets and either from work on their farms, few sources of employment. or agricultural wage employment. Investments in infrastructure and It is this reliance on agriculture that basic services often do not reach makes the rural extreme poor highly these more isolated areas, which vulnerable to climatic shocks and tend to be more disaster-prone. weather events. While agriculture In contrast, extreme poverty is plays a big role in their income and “individualized” in more favourable , the rural extreme poor areas – with good agroecological also diversify their sources of income conditions and connections to in other non-agricultural activities. dynamic products and labour

viii markets. The extreme poor in these Key elements in areas – including rural youth, the countries’ strategies for elderly, and people with disabilities ending extreme poverty – have lower asset endowments (land, education, social capital), Going the extra mile to reach the and fewer opportunities to increase rural extreme poor is not only a the returns on those endowments. crucial factor in the success of SDG1, Therefore, strategies to eradicate but it will also help to prevent crises, extreme poverty need to consider conflict and social tensions, making the specific contexts and needs of populations more resilient to climatic the different rural extreme poor. shocks, providing economic alternatives in rural areas, and decreasing income Extreme poverty, hunger and and non-income inequality. undernourishment often go hand in hand. Extreme poverty influences A fundamental precondition hunger and nutritional status, for ending extreme poverty is affecting the ability of individuals countries’ commitment. A shared and households to access food commitment throughout through purchase or production. is needed to address the root Extreme poverty is also linked causes of extreme poverty, such as to low access to essential health unequal access to resources, gender services and basic infrastructure, inequality, and social discrimination. which are fundamental for food Effective political leadership is a security. At the same time, hunger key factor in successful poverty and undernourishment affect reduction strategies. This entails: the future of young generations, providing clear policy direction and causing learning difficulties, poor adequate means of implementation; health, and lower productivity strengthening and creating effective and earnings over a lifetime. and democratic institutions; creating

ix ENDING EXTREME POVERTY IN RURAL AREAS

incentives for multi-sectoral Another key factor in extreme coordination; as well as monitoring poverty eradication is investing in and evaluating progress to learn from both social and productive capital experiences and improve strategies. at local, sub-national and national levels. Most successful experiences of The first step in ending extreme effective poverty reduction from the poverty is stimulating pro-poor 1960s to the present have involved economic growth and income substantial investments in rural areas, generating opportunities. such as in infrastructure, basic services, This means fostering a pattern health, education, and more recently, of growth and structural change in social assistance. Social protection that generates employment where in particular is now recognized as a the majority of people living in critical strategy for reducing poverty, poverty work. While agriculture hunger and promoting economic is the main source of food and inclusion, particularly among the income for the rural extreme poor, poorest. Social assistance programmes diversification is also an important and non-contributory programmes in strategy to end extreme poverty. cash or in-kind can provide regular Diversification helps generate income and predictable support to extreme for non-agricultural activities for poor and vulnerable people. those rural extreme poor who cannot move out of poverty by specializing A third essential element for in agriculture. Examples include extreme poverty eradication is promoting participation in off-farm setting up dedicated interventions activities, such as food transformation, to reach the poorest of the poor. processing and packaging, particularly In recent years, poverty reduction in more favorable rural areas, and has started to stagnate both in poor activities outside the food system, and middle-income countries due such as environmental services. to the global economic slowdown

x and conflict, with those still left Sustaining livelihoods behind becoming increasingly through agriculture, food harder to reach. The extreme poor systems and the sustainable are highly vulnerable to shocks and use of natural resources risks related to conflict and climate change, yet the coverage of both Agriculture, food systems and natural contributory and non-contributory resources can contribute to reaching social protection and financial Target 1.1 through: (1) ensuring food services is often limited in rural areas, security and nutrition; (2) promoting leaving poor households without a economic inclusion; (3) fostering minimum income or mechanisms environmentally sustainable livelihoods; to manage risks and shocks. and (4) strengthening resilience against shocks as well as restoring Recognizing the need to better livelihoods after shocks occur. articulate and coordinate the different policies and actions aimed at reducing Supporting subsistence agricultural poverty, countries such as China activities can help ensure food and Brazil have opted to implement security and nutrition, generating more dedicated and integrated income for the extreme rural poor, interventions which address the and providing them with access specific needs of the poorest and their to basic staples and higher-value challenges. These country examples foods. Policy tools to promote food demonstrate how policy coherence security include asset transfers, and the multisectoral coordination such as small animals and livestock, of social and economic sectors can building fish ponds, and home and enhance the impact of poverty school gardens. Social protection, eradication policies and programmes. particularly nutrition-sensitive social protection, which includes regular cash transfers, reinforces linkages to

xi ENDING EXTREME POVERTY IN RURAL AREAS

nutrition education, health services, natural resources, such as landless and school food programmes, workers and “livestock-less” herders. particularly in marginal areas. These gaps highlight the need to Adopting the Right to Food can better articulate agricultural, food and help guarantee the implementation environmental policies with poverty of these fundamental policies. eradication, inequality reduction and decent work promotion strategies. Agriculture not only plays a key role in the transformation of the Ending extreme poverty and , but it is also crucial hunger in rural areas will require in ending extreme poverty. generating decent employment, In developing countries, growth in both in the agricultural and agriculture has been more poverty non-agricultural sectors, through reducing than growth in other sustainable agricultural and rural sectors, having bigger impacts on the transformation. While agriculture is rural extreme poor, in the poorest the main source of food and income countries. However, agriculture is for the rural extreme poor, promoting often not well-embedded in poverty their participation in off-farm eradication strategies or given the activities, such as food transformation, prominence that it deserves. The lead processing and packaging, particularly mandate to deal with poverty issues in more favourable rural areas, at country level is often given to is crucial for diversifying their the ministries of social affairs rather livelihoods. Activities outside the than the ministries of agriculture food system, such as environmental or the environment. As a result, services in remote areas, can be agricultural policies tend to neglect particularly beneficial for those the extreme poor, especially those with fewer resources, including who do not have access to productive the landless, women and youth.

xii Natural resources and ecosystem conflicts, weather events, pests services are the basis for sustainable and diseases, particularly in ‘early and productive food and warning and early action systems’ agricultural systems. Many of the can lead to the formulation of extreme poor in rural areas depend early adequate responses, prevent on access to water, forests, fisheries, risks from developing into crises, and land to sustain their agricultural and reduce the cost of response. livelihoods. Climate change, land Social protection contributes to degradation, pollution, and the increasing the resilience of the extreme depletion of natural resources and poor, helping them to effectively biodiversity are amongst the major cope with the negative impacts of impediments to the sustainability of climate change and natural disasters. livelihoods of indigenous peoples, Finally, humanitarian programmes pastoralists, forest people, and fisher can also help restore the necessary folks – who also tend to be the poorest conditions for agricultural livelihoods. and most marginalized communities in society. Targeted policy actions can Reaching the extreme poor will support livelihoods by enhancing require more focused actions local knowledge, introducing new in addition to broad-based techniques for the sustainable interventions. The eradication of management of resources, promoting extreme poverty is possible with the climate-smart and organic agriculture, right investments in the dedicated and sustaining vital ecosystem services. policies and programmes that reach the extreme rural poor directly, and Integrating conflict-sensitive with a deeper understanding of the analysis and assessments of the challenges the rural poor face in rural extreme poor’s specific comparison with the moderate poor vulnerabilities to disaster-related and the rest of the population.

xiii ENDING EXTREME POVERTY IN RURAL AREAS

xiv 1 Introduction

ustainable Development Goal development. Progress towards ending (SDG) 1, Ending poverty in all extreme poverty is largely related to its forms, everywhere, is one of the way are structured and the most ambitious goals set the way resources are distributed. Sby the 2030 Agenda for Sustainable While these structures will continue Development. Target 1.1 of SDG 1 to play a determining indirect role, focuses specifically onEradicating reaching the extreme poor will require extreme poverty in the next 12 years. more focused actions in addition to broad-based interventions. While considerable progress has been This includes understanding the made over the last three decades in specific challenges that the extreme reducing extreme poverty and poverty poor face compared to the moderate overall, about 736 million people1 – poor and the rest of the population, as 10 percent of the global population well as investing in and expanding the – still live in extreme poverty (World dedicated policies and programmes Bank, 2018a), and most of them reside that reach them directly. Actions aimed in rural areas. The pace of poverty at ending extreme poverty will also reduction may slow as those who are need to recognize their social and “left behind” face greater vulnerabilities economic endowment and potential. and structural constraints, which prevent them from benefiting The report focuses on the rural extreme from overall economic growth and poor, who constitute about 80 percent

1 The report uses the World Bank measure for most figures. The measure is based on consumption data (in this case, from 2015) and a poverty line of USD 1.90 a day in 2011 PPP – purchasing power parity. Data is from Povcalnet (World Bank), a global database that covers about 89 percent of the total global population. In the other sections, the report uses other measures of poverty, including multidimensional poverty and chronic poverty. Consistency across the report is difficult given the different sources of data on poverty, particularly on . The bottom line is focusing action on the poorest of the poor, given the best data available, and considering the multiple dimensions and cycles of poverty.

1 ENDING EXTREME POVERTY IN RURAL AREAS

of the extreme poor globally (Castañeda rural areas, and decreasing income and et al., 2018). This population is not non-income inequality. Together with homogeneous: the extreme poor Target 2.1 of the SDGs, on ending experience very diverse situations hunger, the extent to which these of social and economic exclusion, goals are reached will determine the including discrimination, isolation and success of the whole 2030 agenda. political disempowerment. What they often have in common is their high This document presents an analysis dependence on natural resources of the challenges that countries face and agriculture for their livelihoods. in their efforts to eradicate extreme Most of the extreme poor also poverty by 2030. There are six sections engage in multiple non-agricultural in the document, which focus on rural activities to diversify their sources areas: section 1 introduces SDG1, of income. While the report focuses Target 1.1, and the need to eradicate on the extreme poor living in rural poverty; section 2 presents the extent areas, it also recognizes the linkages of the challenge; section 3 profiles the between rural areas and small towns characteristics of the rural extreme and cities, and their importance for poor; section 4 analyses the prospects generating sustainable livelihoods and of reaching Target 1.1 in rural areas, inclusion for the rural extreme poor. considering obstacles to progress; section 5 highlights some country Going the extra mile to reach the rural experiences and lessons in eradicating extreme poor and addressing their extreme poverty; and section 6 explores needs is not only a crucial factor in the role of agriculture, food systems the success of SDG1, but it will also and natural resources in sustaining generate positive outcomes on many livelihoods, eradicating extreme poverty fronts, including helping to prevent and reducing rural poverty, highlighting crises and conflict, making populations the policies needed to better reach more resilient to climatic shocks, the extreme poor in rural areas. providing economic alternatives in

2 Understanding the extent of the challenge 2 in rural areas

he extent of the challenge 736 million people, representing of eradicating extreme 10 percent of the global population, poverty is set by Target still living in extreme poverty. 1.1 of the SDGs. Target 1.1 Tis currently measured by indicator While income is a good measure to 1.1.1: Proportion of population below understand who the extreme poor are, the international poverty line, by it only captures the income dimension sex, age, employment status and of extreme poverty. In addition to geographical location (urban/rural). income, extreme poverty is also Indicator 1.1.1 defines the extreme manifested by social marginalization poor as those individuals earning and exclusion, different manifestations less than USD 1.25 a day – the of malnutrition, poor living conditions, international extreme poverty line lack of access to basic services, resources set at the time the indicator was and employment opportunities, among approved by UNSD (2018), which others. To gain a better understanding is monitored by the World Bank.2 poverty, several measures are used, Using this measure, there are about to the extent these are available3,

2 The official indicator is likely to be updated to USD 1.90 a day. Povcalnet was last updated in September 2018 and the World Bank numbers currently cover 164 countries, covering 65 percent of the world’s population. The USD 1.9 a day line corresponds to the average poverty line set by the average of official poverty lines for a group of least developed countries. The multidimensional poverty index has also been proposed and has been included by several countries in their SDGs Voluntary National Reviews. 3 The two measures of poverty described in this section should be seen as complementary, as they are measuring different aspects of poverty. Together, they help to better understand the phenomenon of poverty, while at the same time, point to specific policy actions.

3 ENDING EXTREME POVERTY IN RURAL AREAS

respecting countries contexts and assesses poverty at the individual their options of measurement. level: it complements traditional Multidimensional poverty measures income-based poverty measures by are good complements of income capturing the severe deprivations and consumption-based poverty faced by individuals in terms of health, measures, as they provide deeper education, and living standards (OPHI, insight into the degrees of deprivation 2018)6. Based on this index, if someone and vulnerability of the extreme poor.4 is deprived in a third or more of ten (weighted) indicators, the global One of the most widely used index identifies them as “MPI poor”, multidimensional measures is the and the extent – or intensity – of their global multidimensional poverty index5 poverty is measured by the number of (MPI), developed by the Oxford Poverty deprivations they are experiencing. and Human Development Initiative (OPHI), which is an international Using the MPI, OPHI identifies measure of acute poverty covering over approximately 1.45 billion people 100 developing countries. The MPI as poor7, or 26.5 percent of the

4 Poverty is often defined by one-dimensional measures, such as income. But no one indicator alone can capture the multiple aspects that constitute poverty. Multidimensional poverty is made up of several factors that constitute poor people’s experience of deprivation, such as poor health, lack of education, inadequate living standards, lack of income (as one of several factors considered), disempowerment, poor quality of work and threat from . A multidimensional measure can incorporate a range of indicators to capture the complexity of poverty and better inform policies to relieve it. Different indicators can be chosen which are appropriate to the society and situation. Income alone can miss a lot. Poor people themselves describe their experience of poverty as multidimensional. This reveals that poor people describe ill-being to include poor health, nutrition, lack of adequate sanitation and clean water, , low education, bad housing conditions, violence, shame, disempowerment and much more. 5 A multidimensional approach identifies people who are being left behind in multiple SDGs, targets, and indicators at the same time. The poorest of the poor are subject to overlapping inequalities and overlapping dimensions of poverty. Measures such as the global MPI identify such dimensions, and a reduction of MPI is a good bellwether indicator of ‘Leaving No One Behind’ for key poverty indicators. 6 The MPI has ten indicators: nutrition, child mortality, years of schooling, school attendance, cooking fuel, improved sanitation, safe , electricity, flooring and assets (OPHI, 2018). 7 The MPI was updated in January 2018, using data from 104 countries, home to 76 percent of the world’s population, or 5.5 billion people. With an international poverty line of USD 3.2 a day, the World Bank estimates that 1.9 billion people are considered poor (extreme and moderate poor).

4 population in the 104 countries which varies greatly by country. surveyed. About half of them – some Another complication is related to the 706 million people – are considered process of urbanization and the fact destitute due to the severe deprivations that the distinction between urban and they experience (OPHI, 2017). rural is becoming increasingly blurred, This measure of destitution identifies as there are more urban-rural linkages a subset of the MPI poor who are the in the economy and society. Also, the poorest of the poor. OPHI finds that cost of living in urban areas is generally destitution rates tend to be lower higher, yet the purchasing power parity than USD 1.90/day extreme poverty exchange rates used to normalize rates (Figure 1). However, destitution household consumption per capita is markedly higher than income (PPP) in the monetary poverty measure poverty in several countries, are the same for urban and rural areas.8 including Chad, Ethiopia, Gambia, Mauritania, , Pakistan, Sudan, Most of the extreme poor live and South Sudan. These differences in rural areas. Despite increasing in poverty measurement underscores urbanization, about 45 percent of the the importance of measuring and global population still lives in areas fighting poverty in all its forms defined as rural (UN, 2014). Using the and dimensions (OPHI, 2017). World Bank’s Povcalnet data for 89 developing countries9, Castaneda Conceptualizing and measuring “rural” et al. (2018) find that approximately is also challenging. Ravallion et al. 80 percent of the extreme poor live in (2007) note several complications. rural areas (Figure 2)10. Over 18 percent One is related to the definition of of rural inhabitants in developing what constitutes “rural”, usually countries live in extreme poverty, based on population density and compared to almost 6 percent of urban

8 As we continue using the definition of rural that countries provide, additional studies on poverty could also use cut-offs based on agroecological zones and/or alternative levels or rurality based on population density, or electricity. 9 The data represents 84 percent of the developing world’s population in 2013, in all geographical regions. 10 Note that the share of urban and rural population in figure 3 refers to the total sample of 89 countries of Castañeda et al.’s study, and not the total global population.

5 ENDING EXTREME POVERTY IN RURAL AREAS

Figure 1. Comparison of the headcount ratios of MPI poor, MPI destitute, and income extreme poverty measure of USD 1.90/day

100%

80%

60%

40%

20%

0% HAITI CHAD CHAD TOGO INDIA NIGER NIGER NEPAL BENIN KENYA YEMEN SUDAN GHANA GUINEA LIBERIA ZAMBIA GAMBIA UGANDA RWANDA NAMIBIA SENEGAL SOMALIA SOMALIA LESOTHO VANUATU ETHIOPIA ETHIOPIA BURUNDI DJIBOUTI PAKISTAN COMOROS TANZANIA MYANMAR CAMBODIA CAMEROON TE D’IVOIRE MAURITANIA TIMOR-LESTE BANGLADESH Ô MADAGASCAR MOZAMBIQUE AFGHANISTAN SIERRA LEONE SIERRA LEONE SOUTH SUDAN SOUTH SUDAN C BURKINA FASO REP. OF CONGO REP. GUINEA -BISSAU DEM. REP. OF CONGO OF CONGO DEM. REP. LAO PEOPLE’S DEM. REP. LAO PEOPLE’S DEM. REP. CENTRAL AFRICAN REPUBLIC CENTRAL AFRICAN REPUBLIC

Destitute MPI Poor USD1.90/day poor

residents (Figure 3). When considering Since 1990, the challenge of ending moderate poverty, over 46 percent extreme poverty has shifted from of the rural population globally is East Asia to sub-Saharan Africa poor, compared to approximately and . In 1990, most of the 16 percent of the urban population. extreme poor – around 987 million –

6 100%

80%

60%

40%

20% IRAQ PERU LIBYA EGYPT CHINA BELIZE SERBIA GABON BRAZIL MEXICO BOLIVIA TUNISIA JORDAN GUYANA ALGERIA ALBANIA JAMAICA UKRAINE ARMENIA ECUADOR VIET NAM MOLDOVA MALDIVES MOROCCO THAILAND PALESTINE SURINAME COLOMBIA BARBADOS MONGOLIA INDONESIA TAJIKISTAN SWAZILAND NICARAGUA GUATEMALA MACEDONIA UZBEKISTAN AZERBAIJAN SAINT LUCIA PHILIPPINES KYRGYZSTAN KYRGYZSTAN KAZAKHSTAN EL SALVADOR MONTENEGRO SOUTH AFRICA TURKMENISTAN DOMINICAN REPUBLIC TRINIDAD AND TOBAGO TRINIDAD AND TOBAGO SYRIAN ARAB REPUBLIC SYRIAN ARAB REPUBLIC SAO TOME AND PRINCIPE SAO TOME AND PRINCIPE BOSNIA AND HERZEGOVINA BOSNIA AND HERZEGOVINA

Source: OPHI, 2017.

were concentrated in East Asia and 47 million. This was mainly thanks the Pacific, and almost 756 million to progress achieved in China, where were living in China alone. By 2015, the number of extreme poor people the number of the extreme poor dropped to 10 million in 2015 (World in that region had decreased to Bank, 2018a). Progress in extreme

7 ENDING EXTREME POVERTY IN RURAL AREAS

Figure 2. Share of the population by welfare and Figure 3. Share of extreme poor, moderate poor and residential sector non poor in urban and rural areas

100% 90 83.8 80 80% 70 67.7 44.2 55 60 54.4 60% 75.7 80.1 50 40 40% 27.4 30 18.2 19.9 55.8 20 20% 45 10.7 12.5 19.9 24.3 10 5.5 0% 0 Extreme Moderate Non poor Total Urban Rural Total poor poor population

Urban Rural Extreme poor Moderate poor Non poor

Source: Castañeda et al., 2018. Source: Castañeda et al., 2018.

poverty reduction in this region has from 432 million people in 1993 to taken place in urban and rural areas, 268 million people in 2011. Much of the as both the share of urban and rural progress in poverty reduction in South non-poor have increased, while the Asia has been driven by a reduction in shares of moderate and extreme poor rural extreme poverty, but at a slower in both urban and rural areas have pace than in East Asia (Figure 4b). shrunk since the 1990s (Figure 4a).11 In sub-Saharan Africa, however, the While the number of the extreme poor number of the extreme poor has in South Asia dropped by approximately increased, from 276 million in 1990 to half between 1993 and 2015, about 413 million in 2015. Over 41 percent 16 percent of the population – of the population in this region lives in 274.5 million people – still live in extreme poverty (World Bank, 2018a). extreme poverty (World Bank, 2018a). Despite the increase in numbers, the Much of this progress was driven by incidence of extreme poverty in rural India, where the number of people areas seems to have decreased since the living in extreme poverty was reduced 1990s (Figure 4c). Sub-Saharan Africa

11 Note that the graphs in figure 4 are not representative of all countries in the respective regions. The figures are based on World Bank data for 31 countries with a total population of 4.2 billion.

8 Figure 4. Changes in proportions of rural and urban extreme poor, moderate poor, and non-poor, in total population of selected countries, by region, 1990s–2010s a) East and Southeast Asia b) South Asia 100% 100% 12 8 10 15 8 10 8 80% 35 45 80% 10 9 7 10 7 60% 5 2 60% 18 3 41 32 47 16 6 1 40% 40% 17 12 26 25 20% 33 20% 23 16 25 24 11 14 0% 9 0% 1990s 2000s 2010s 1990s 2000s 2010s c) Sub-Saharan Africa

100% 10 13 16 6 8 80% 12 8 % Non-poor in rural areas 11 11 % Moderate poor in rural areas 60% % Extreme poor in rural areas 44 37 31 40% % Extreme poor in urban areas % Moderate poor in urban areas 18 20% 17 19 % Non-poor in urban areas 13 16 0% 11 1990s 2000s 2010s

Note: Poverty level used is “extreme”, defined as living on less than USD1.90 a day (2011 PPP USD) and “moderate”, defined as living on less than USD3.10 a day (2011 PPP USD) but above USD1.90 a day. The charts refer to the following countries, selected for data availability: East and Southeast Asia – Cambodia, China, Indonesia, Philippines, Thailand, Viet Nam; South Asia – Bangladesh, Nepal, India; Sub-Saharan Africa – Burkina Faso, Côte d’Ivoire, Ethiopia, Mali, Malawi, Mozambique, Nigeria, Rwanda, South Africa, Uganda, United Republic of Tanzania, Zambia.

Source: FAO calculations from World Bank and IFAD (2016).

also has the highest poverty gap (a both of which are regions with larger measure to assess the depth of poverty), urban populations. In the Near East which in 2015 was 15.8 compared to and North Africa, however, extreme 2.8 in South Asia (World Bank, 2018a). poverty has increased from 2.6 percent in 2013, to 5 percent in 2015, and The numbers and shares of extreme the number of people living in poverty are comparatively lower in extreme poverty has doubled, from the Near East and North Africa, and 9.5 million to 18.7 million, mainly Latin America and the Caribbean, driven by conflict in Syria and Yemen

9 ENDING EXTREME POVERTY IN RURAL AREAS

(World Bank, 2018a and 2018c). or loss of assets due to a shock, Latin America and the Caribbean saw such as job loss, illness or a climatic rapid reductions in extreme poverty event, may cause a temporary or from 1999 to 2015, from 69.7 million to permanent fall into poverty if the loss 25.9 million people, and the headcount of assets creates a poverty trap12. index fell from 13.8 percent to 4 percent. The pace of reduction, however, According to the Chronic Poverty has slowed in the past few years. Advisory Network, up to half a billion people are trapped in chronic poverty, Poverty has a strong temporal which is extreme poverty that persists dimension. Poverty can be transitory over years or a lifetime, and is often (e.g. seasonal) or structural (e.g. transmitted across generations (ODI, chronic). Individuals and households 2014). A significant portion of those may move in and out of poverty, who get out of poverty may fall back or be pulled deeper into poverty into it over time (Figure 5). The long and extreme poverty, depending on duration of poverty illustrates the their ability to manage shocks and persistent structural constraints faced sustain income generation over time. by the poorest people, and the need The difference is important, as it often for structural changes and dedicated implies different drivers of poverty and support, particularly in terms of therefore different potential solutions. providing adequate social protection. In rural areas, poverty tends to increase during the lean season of agriculture, Another way to assess progress on or for fisher folk, during fishing bans, extreme poverty eradication is by if people cannot access other income looking at the consumption floor: the generating opportunities. Engaging in consumption level of the poorest of non-agricultural activities off-season the poor. Over the past thirty years, can complement agricultural income the consumption level of the extreme and prevent falling into poverty. poor has not improved (Ravallion, Similarly, a sudden drop in income 2016). While the welfare level of the

12 The term poverty trap refers to a scenario where current poverty status has an effect on people’s future well-being. Both biological mechanisms and intergenerational poverty can result in a poverty trap. Biological mechanisms, such as reduced health from low food consumption due to low income, affect the capacity of a person to generate income in the future. Intergenerational poverty results in reduced prospects of more productive employment as a consequence of not having access to school today, leading to a poverty trap.

10 overall population in the developing practically unchanged (Figure 6). world has indeed increased at a One of the causes is the lack of social pace of two percent per year from protection coverage, particularly in 1980 to 2012, and four percent since poor countries, where the performance 2000, the welfare level of those that of social assistance programmes remained at the bottom of the income tend to be weak (Ravallion, 2016). or consumption distribution has been

Figure 5. What happens to people who escape extreme poverty

100 80 60 40 % of households 20 0 Philippines Indonesia Viet Nam South Africa Rural Kenya Uganda Rural Ethiopia 2003-2009 1993/4-2000 2002-2006 2008-2012 2004-2010 2005/06-2010/11 1999-2009

Fall back into poverty Remain out of poverty

Note: Calculations of poverty based on a poverty line of USD 1.25 a day PPP. Source: ODI, 2014.

Figure 6. Mean consumption for the developing world

6

5

4

3 Mean consumption 2

($ per person day; 2005 prices) 1

0 1980 1984 1988 1992 1996 2000 2004 2008 2012

Overall mean Mean for those living below $1.25 Estimated floor (linear prob.) Estimated floor (quadratic prob.)

Note: Calculations of poverty based on a poverty line of USD 1.25 a day PPP. Source: Ravallion, 2016.

11 ENDING EXTREME POVERTY IN RURAL AREAS

Characterizing the rural extreme poor: 3 what challenges do they face?

overty trends help to orient and on natural resources for their policies and programmes livelihoods, and are more likely to live by quantifying and in forests and savannahs. While they are geographically identifying not always smallholders, the extreme Pextreme poverty in rural areas. poor often have very few assets and However, reaching the extreme engage in low-quality and low-paid poor can be difficult. In rural areas labour. Hunger and malnutrition are in particular, identifying those often critical, as the rural extreme poor who experience the highest levels are usually the most affected by food of deprivation – due to lower price shocks. They are also more likely access to basic public services, to suffer from social exclusion based infrastructure, housing and assets on ethnicity, gender and religion. – can be challenging because of Extreme rural poverty is specific, remoteness and cultural differences. however, to the context in which people Oftentimes, the rural extreme live, and it is influenced by different poor (like the urban poor) are levels of urban linkages, population “hidden” in non-poor families due density and agroecological conditions, to intra-household dynamics and as well as by social and political inequality, which is often the case for exclusion dynamics at local level. many rural women and children. Extreme poverty and hunger often Few studies compare the characteristics go hand in hand, reinforcing the of the extreme and moderate poor. intergenerational transmission However, the knowledge available of poverty. Extreme poverty and points to some distinctive features of hunger are closely related (Figure 7). the rural extreme poor, who are more Extreme poverty is a key determinant dependent on agricultural income of hunger and nutritional status,

12 Figure 7. Undernourishment and extreme poverty rates generally correlate at the country level

Prevalence of undernourishment 2014-16 (SOFI 2017)

0 5 10 15 20 25 30 35 40 45 50 70

Mozambique 60 Rwanda Zambia

Benin 50 Togo y = 1,0523x - 1,2332 2 Niger Burkina Faso R = 0.40592 40 Liberia

Timor-Leste 30 Côte d'Ivoire Ethiopia

20 South Africa Yemen

Poverty head count PPP $1.9 (Povcalnet 2014-16) Honduras Serbia Colombia Bangladesh Mauritania Gambia 10 Guatemala Pakistan Armenia Georgia Philippines Myanmar Romania Bolivia Ecuador Tajikistan Brazil El Salvador Nicaragua 0 Croatia Denmark Kyrgyzstan Paraguay India Mongolia Sri Lanka Panama Dominican Slovakia Costa Rica Republic Bulgaria Viet Nam Mauritius Chile Egypt

Source: FAO, IFAD, UNICEF, WFP and WHO, 2017.

affecting the ability of individuals and fewer than 1 600 kcal a day). This study, households to access food through as well as almost all studies looking at purchase or production. One of the few food consumption by wealth status, studies available, covering 20 countries finds that poorerrural households from different regions of the world spend a relatively higher proportion (Ahmed et al., 2002), finds a high of their income on food compared to correlation between living in ultra others. Women are often more food poverty (defined in the study as those insecure than men. Almost one-third of living on less than 50 cents a day), and women of reproductive age suffer from living in ultra hunger (those consuming anaemia worldwide, which puts the

13 ENDING EXTREME POVERTY IN RURAL AREAS

nutrition and health of many children levels of undernourishment and lower at risk. Poor rural women in particular levels of extreme poverty and vice suffer from anaemia, especially versa (Figure 8). In a recent study indigenous and tribal women (FAO, from sub-Saharan Africa, Brown et al. IFAD, UNICEF, WFP and WHO, 2018). (2017) found that about three-quarters of underweight women and children Extreme poverty is also linked were not in the poorest 20 percent of to minimal or inadequate access households, and around half were not to essential health services and in the poorest 40 percent of households. basic infrastructure, which are fundamental for adequate food Extreme poor people are often utilization13. Similarly, hunger and located in remote or isolated rural undernourishment perpetuate extreme areas, which are poorly connected poverty, reducing labour productivity with the surrounding rural areas. in the short and long term, and forcing In recent years, there has been more families to focus on immediate survival recognition of the role of small cities rather than longer-term strategies and towns for the development of for income generation. Hunger and rural areas. FAO (2017a) estimates undernourishment also affect children’s that half of the world’s population future through learning difficulties, resides within or in proximity to small poor health, and lower productivity cities and towns, compared with and earnings over a lifetime. In fact, 35 percent living in or near larger evidence shows that higher mobility is cities. The remaining 15 percent reside associated with lower rates of stunting in the rural hinterland, located more (World Bank, 2018b), and children than three hours of travel time from in the poorest households are more any urban centre of 50 000 inhabitants affected by stunting (Figure 7). or more. The linkages between urban areas, small cities, rural towns and Poverty and hunger, however, are very the hinterland are complex, including distinct and multifaceted phenomena: geographical and agroecological the correlation is not always evident. characteristics and dynamic economic In fact, some countries present higher and social systems (Figure 9).

13 Utilization of food through adequate diet, clean water, sanitation and health care to reach a state of nutritional well-being where all physiological needs are met.

14 Figure 8. Prevalence of stunting in children under five, by household income

70%

60%

50%

40%

30%

20%

10%

0%

Prevalence of childhood stunting in children younger than 5 years (2013) HAITI (2012) CHAD (2015) INDIA (2006) NIGER (2012) NEPAL (2011) NEPAL KENYA (2014) KENYA GHANA (2014) MALAWI (2016) MALAWI JORDAN (2012) NIGERIA (2013) BURUNDI (2010) PAKISTAN (2013) PAKISTAN MOROCCO (2004) COLOMBIA (2010) DR CONGO (2014) GUATEMALA (2015) GUATEMALA BANGLADESH (2014) SIERRA LEONE (2013) DOMINICAN REPUBLIC DOMINICAN REPUBLIC BURKINA FASO (2015) BURKINA FASO

Highest quintile Middle quintile Lowest quintile

Source: Demographic and Health Surveys (DHS) Programme.

The hinterland tends to be connected poverty: marginal rural areas and across a range of dimensions – favourable rural areas. Marginal rural including services, roads, internet areas are those areas where the rural access or the availability of cell extreme poor are geographically phones – with sparse populations. concentrated in low population However, investments in infrastructure densities. These areas have poor and basic services often do not reach agroecological endowments or isolated the more isolated areas, which tend access to markets and sources of to be more disaster-prone, thus employment. Mountain people in lowering the poverty-reducing effect developing countries are an example of income growth for more marginal of people living in marginal rural areas (Barbier and Hochard, 2014). areas, which are often depopulated. Using a global mapping model, De Janvry and Sadoulet (2007) FAO and the Mountain Partnership differentiate between two types of Secretariat (2015b), found that by geographical areas for rural extreme 2012, 45 percent of rural populations

15 ENDING EXTREME POVERTY IN RURAL AREAS

Figure 9. Types of agro-ecological systems and levels of urbanization

Very mountainous

Very dry

Very wet

INCREASED POPULATION DENSITY AND URBANIZATION

URBAN HIGHLY PRODUCTIVE HIGH POPULATION REMOTE SPARSE PRESSURE, CONSTRAINT AREAS Agro-ecological system Urban, peri-urban Lowland irrigated areas, Highland areas, dryland, High mountain, pastoral, Very high mountains, humid lowlands, coastal semi-arid, forest margins, arid, rainforest jungle, desert large islands small islands

Urban-rural continuum: Urban areas Favoured areas Less-favoured areas Marginal areas population density and urbanization

Source: Hancock (2006) based on work of Dixon, Gulliver and Gibbon (2001).

living in mountains were vulnerable to dynamic products and labour to food insecurity. This represented markets. Extreme poverty in these a 31 percent increase in the contexts is more “individualized”. number of vulnerable mountain The extreme poor are those with low people since 2000, while the rural asset endowments (land, education, mountain population itself had social capital), or lacking opportunities increased by only 10 percent. to increase the returns to those endowments (poor regional dynamics, Others, who are part of the rural discrimination). Oftentimes, they extreme poor, live in more favourable include rural youth or the elderly, areas, with good agroecological as well as people with disabilities. conditions and good connections Surveys to measure poverty often

16 Figure 10. Share of rural workers by employment sector overlook more remote places, as they and welfare are hard to get to. As a result, poverty levels in remote areas are not fully 100% 23.7 represented in national statistics, 80% 39.3 thus underrepresenting rural poverty. 60% 62.2 The World Bank (2010) calculated that in Argentina, four million rural residents 40% 76.3 60.7 and another twelve million in small 20% 37.8 urban areas were beyond the reach of 0% their Permanent Household Survey. Extreme poor Moderate poor Non poor The study also found great variation Agriculture Non-Agriculture of welfare within rural residents. Source: Castañeda et al., 2018.

While the rural extreme poor rely heavily on agriculture and natural High-return activities in agriculture resource management for their have higher “barriers to entry” that livelihoods, they also diversify require land and natural resources, their income by engaging in other human capital and access to finance, sectors. In fact, about 76 percent among others; however, average of the rural extreme poor workers land size is generally small, and land aged 15 and above work in the tends to be concentrated among agricultural sector as a primary activity the wealthiest (Zezza et al., 2011). (Figure 10), which is a much higher Being heavily reliant on agriculture, percentage compared to non-poor rural extreme poor households are people (Castaneda et al., 2018). also more vulnerable to extreme weather events and climate Agricultural activities of the change (World Bank, 2016b). extreme poor tend to be primarily subsistence oriented. The numerous By diversifying their income and structural constraints they face limit engaging in wage labour and their agricultural productivity and non-agricultural self-employment productive potential. While many of activities, the rural extreme poor can the extreme poor have some degree better manage risk and overcome of access to input and output markets, failures, particularly in terms a large share of their production of access to liquidity (Davis et al., is consumed by the household. 2017; De Janvry and Sadoulet, 2001).

17 ENDING EXTREME POVERTY IN RURAL AREAS

Wealthier rural households tend to agricultural wage labour, which is often diversify to higher-return activities, a last-resort activity with poor labour particularly non-agricultural wage conditions and low remuneration. labour and self-employment. In sub-Saharan African countries for Conversely, poorer rural households example, agricultural wage labour tend to diversify to low-return activities, is unambiguously associated with due to their lower levels of education the lowest levels of rural household and skills. Overall, there is a decrease welfare (Davis et al., 2017). in the share of on-farm income with increasing levels of welfare, including Labour migration is also an important in regions such as sub-Saharan Africa, part of rural households’ diversification where the agricultural sector constitutes strategies and coping mechanisms. a larger share of household income Mercandalli and Losch (2017) report (Figures 11 and 12). In many cases, that in sub-Saharan Africa, between diversification among the poorest is in 50 and 80 percent of rural households

Figure 11. Share of total income from main income generating activities (Africa) by expenditure quintile

100

80

60

40 Shares of Income (%) 20

0 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 NIGER 2011 KENYA 2005 KENYA GHANA 1992 GHANA 1998 GHANA 2005 MALAWI 2004 MALAWI 2011 MALAWI NIGERIA 2004 NIGERIA 2010 UGANDA 2006 UGANDA 2010 UGANDA 2011 ETHIOPIA 2012 TANZANIA 2009 TANZANIA MADAGASCAR 1993

On-farm activities Agricultural wages Transfers and other non -labour sources Non-farm activities

Note: Expenditure quintiles move from poorer to richer, countries are sorted by increasing GDP. Years next to country names refer to the year in which the survey was carried out. Countries are ordered by GDP in a specific year.

Source: Davis et al., 2017.

18 have at least one migrant member producers, there are important of capital and social networks to differences in terms of income, which finance and facilitate such migration. have implications for shaping policy support. The Smallholder Families Data Not all rural extreme poor are Hub (CGAP, 2017) uses a threshold of smallholders. Being a smallholder 5 hectares to define smallholder, and farmer is not necessarily associated the extreme poverty line of USD 1.25 with extreme poverty. The extent to to define extreme poor. This initiative which these two categories overlap has data for six countries, all showing varies according to the definition of different shares of extreme poor smallholder and the poverty measure smallholders: 24 percent in Nigeria, that is used. 26 percent in Uganda, 27 percent is quite complex, as is measuring in Bangladesh, 37 percent in Côte smallholders. Evidence shows that d’Ivoire, and 55 percent in both within small-scale agricultural Mozambique and Tanzania.

Figure 12. Share of total income from main income generating activities (Non -Africa) by expenditure quintile

100

80

60

40 Shares of Income (%) 20

0 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 12345 INDIA 1993 INDIA 2000 NEPAL 1996 NEPAL 2003 NEPAL BOLIVIA 2005 PANAMA 1997 PANAMA 2003 PANAMA ALBANIA 2002 ALBANIA 2005 1992 VIETNAM 1998 VIETNAM 2002 ECUADOR 1995 ECUADOR 1998 PAKISTAN 1991 PAKISTAN 2001 PAKISTAN BULGARIA 1995 BULGARIA 2001 TAJIKISTAN 2003 TAJIKISTAN 2007 TAJIKISTAN NICARAGUA 1998 NICARAGUA 2001 NICARAGUA 2005 GUATEMALA 2000 GUATEMALA 2006 GUATEMALA BANGLADESH 2005 BBANGLADESH 2000

On-farm activities Agricultural wages Transfers and other non -labour sources Non-farm activities

Note: Expenditure quintiles move from poorer to richer, countries are sorted by increasing GDP. Years next to country names refer to the year in which the survey was carried out. Countries are ordered by GDP in a specific year.

Source: Davis et al., 2017.

19 ENDING EXTREME POVERTY IN RURAL AREAS

The FAO Smallholders Data Portrait Some 40 percent of the rural extreme (2018a) defines smallholders as poor – around 250 million people – live those households with less than in forest and savannah areas (Table 2, the median-size landholding from FAO 2018b). In absolute numbers, national household survey data. Africa represents the greatest amount, The study defines extreme poverty with 159 million people living in and moderate poverty as the bottom those areas. In relative terms, most 20 percent and 20 to 40 percent of of the rural extreme poor in Latin the income distribution. The results America live in forested areas. also find that smallholders are not necessarily extreme or moderate poor A survey covering about 8 000 (Table 1). Some of the rural extreme households in tropical or sub-tropical poor have access to land and work regions of 24 developing countries on their own farms; others, who are finds that about 28 percent of landless, can engage in crop agriculture forest-dependent rural household as wage labourers, pastoralists, incomes are derived from forests, fishers and forests dwellers, living 77 percent of which come from in remote, less favoured areas for natural forests (Angelsen, et al., 2014). agriculture, and often belonging In absolute terms, environmental to minority ethnic groups. income is about five times higher in the wealthiest households (the Forestry and fishing are important highest quintile) compared to the two livelihoods for the rural extreme lowest quintiles. In general, evidence poor. The incomes from forest and shows that poorer households rely fishery activities of the rural poor more heavily on subsistence products, are often underreported, particularly including wood fuels and wild foods, when they are of subsistence and and on products harvested from safety-net nature. As demonstrated natural areas other than forests, by Vedeld et al. (2004), a lack of such as fodder for animals. data can lead to flawed poverty policies and interventions, rendering Fisheries is also an important source environmental policies devoid of of livelihood for the rural extreme important sources of income, nutrition poor. FAO (2002) estimated that the and health for the extreme poor – for 5.8 million fishers living under USD 1 example when fishing is banned, a day represented 20 percent of the or forested areas are protected. world’s fishers at the time (using

20 Table 1. Proportion of smallholders (rural areas only) that are poor

COUNTRY EXTREME POOR (%) MODERATE POOR (%) NON-POOR (%) Sub-Saharan Africa

Ghana, 2013 16.1 20.6 63.4

Kenya, 2005 15.1 18.7 66.2

Ethiopia, 2012 23.6 22.4 54.0

Malawi, 2011 22.7 21.1 56.2

Niger, 2011 19.8 20.6 59.6

Nigeria, 2013 20.4 22.2 57.4

United Republic of Tanzania, 2013 22.5 22.2 55.3

Uganda, 2012 20.5 25.7 53.8

Asia

Bangladesh, 2005 18.1 22.1 59.9

Nepal, 2003 21.6 20.3 58.1

Viet Nam, 2008 18.9 21.5 59.6

Cambodia, 2004 22.2 22.0 55.8

Indonesia, 2000 22.0 24.2 53.8

Latin America

Bolivia (Plurinational State of), 2005 30.5 23.8 45.7

Guatemala, 2006 28.2 24.4 47.4

Nicaragua, 2005 23.3 21.7 55.1

Panama, 2003 27.4 22.4 50.2

Eastern Europe and Central Asia

Albania, 2005 21.2 19.1 59.6

Tajikistan, 2007 20.9 21.7 57.5 Source: FAO, 2018a.

Table 2. Distribution of rural people living on less than USD 1.25 per day and residing in or around tropical forests and savannahs

AFRICA LATIN AMERICA ASIA TOTAL TROPICS

Forest population (millions) 284 85 451 820

Forest population living on under USD1.25/day (millions) 159 8 84 251

Forest population living on under USD1.25/day as percentage of 50% 82% 27% 40% total rural population living on under USD1.25/day Source: IFAD, 2016.

21 ENDING EXTREME POVERTY IN RURAL AREAS

2001 poverty data, and 1990 fishers’ from fisheries are scarce, but some data). After adding the 17.3 million statistics suggest their relevance for extreme poor people working in rural households in specific countries related upstream and downstream and territories. For example, inland fishing activities (e.g. boat building, fishing households in Cambodia get marketing and processing), the more than 50 percent of their income number of extreme poor fishers from fishing; in the mainstream totalled 23 million, excluding their Mekong River, households derive family dependants. The fishery 20 percent of their income from sector is particularly important fishing. In parts of the Zambezi in rural and remote areas where Basin, fish provides more household alternative employment is lacking income than cattle, and in the (FAO, 2017e). Like forest-related Brazilian Amazon, households obtain activities, fisheries help to strengthen 30 percent of their income from resilience by acting as a safety net fishing (FAO, 2010). As demonstrated during periods of low employment, in a World Bank (2012) case study agricultural lean times, and when of Bangladesh, the share of income disasters strike. Studies quantifying from fishery capture is highest in the the share of household income rural poorest households (Figure 13).

Figure 13. Income from fisheries in Bangladesh by income group

10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 Share of fisheries in total income (%) 1.0 0 Bottom 10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% Top 10% Per capita income decile group

Rural culture Rural capture

Source: World Bank 2012

22 For many extreme poor rural and export markets. Herd composition households, livestock is also (livestock species) depends on a fundamental source of wealth status, market access and the nutrition and risk management. availability of natural resources. Livestock helps increase the financial capital of families: it works as a There are also great wealth savings mechanism, a liquid asset, inequalities amongst pastoralists. and a credit collateral, supporting About 85 percent of pastoralists and households’ strategies for consumption 75 percent of agro-pastoralists live smoothing when shocks occur (FAO, below the poverty line of USD 1.25 2018d). Ownership of livestock is per capita per day (De Haan, usually relatively evenly distributed 2016). Even when pastoralists are across rural households, and even relatively rich in assets, they are the poorest households may have often deprived of basic services due small livestock – such as goats, sheep, to the context in which this system and poultry – though total livestock of pastoralism develops: Households holdings tend to be concentrated often split to migrate to other areas among the wealthy (Zezza et al., 2011). where these services are available, such as schools for their children. Extreme poverty is also spread Some pastoralist populations are among pastoralists. Pastoralism is among the most vulnerable in the defined as a production system that world, suffering from food insecurity derives a number of products and and loss of livelihoods, as their services from cattle – including milk, capacity to adapt to and recover meat, fibre, hides, employment, from crises declines with repeated and transport – and provides inputs and often overlapping shocks. to agriculture, rural tourism and nature conservation (FAO, 2018f). Pastoral livelihoods have been Pastoralism is highly heterogeneous. severely undermined by decades Some pastoralists are nomadic, of marginalization from policy having livestock as their only source and investment decision-making of income, but the majority, namely processes, violence and displacement, agro-pastoralists, also produce crops. as well as insecure tenure rights Pastoralist production strategies vary and access. Their adaptability and depending on their engagement with mobility in relation to resource markets, and demand differs for local variability have been undermined by

23 ENDING EXTREME POVERTY IN RURAL AREAS

numerous factors: climate change, and pastures, can be a determining environmental degradation, the factor of poverty and inequality. growing risk of animal and zoonotic diseases, instability and conflicts in Access to land and natural resources drylands, and pressures to expand depends on the existing types of agricultural production to feed tenure, including customary and a rapidly increasing population. community-based tenure, the These adverse effects combine to outcomes of land reforms and push pastoralists deeper into poverty, the degree of implementation of and can exacerbate existing drivers land administration mechanisms. of migration, particularly rural-urban Land tenure and access to natural movements. Adding to the complexity resources is often insecure, particularly of this situation, disruptive climate for the extreme poor. Policies that related events can also be conflict secure tenure rights for the poor and stressors, exacerbating tensions vulnerable – including indigenous regarding tenure rights and access people, landless farmers, pastoralists, to natural resources, such as grazing rural women and youth – could and water (Catley et al., 2012). contribute to eradicating extreme poverty (FAO, 2018a). However, in Extreme poor people are often some contexts, imposing individual landless or have insecure tenure property rights of land can make rights over land and other natural tenure inflexible, and harm people’s resources. While in South Asia, the food security and livelihoods. extreme poor tend to be the landless For example, in pastoralist systems, in rural areas, in sub-Saharan Africa, arid conditions require more flexible the relationship between extreme tenure to allow mobility of people and poverty and landlessness is less clear. animals (Holden and Ghebru, 2016). Here, the extreme poor often own some land, but of small size, and While land tenure security is lack access to other key productive necessary, it is an insufficient condition assets and markets (IFPRI, 2002). for land investment and income Given that “land dependency” growth (Holden and Ghebru, 2016). affects the types of livelihoods and There is little evidence that more economic opportunities that rural tenure security, such as land titling, people have, being landless, or having has led to an increase in credit and limited access to forested areas investment (see Boucher et al., 2002,

24 Figure 14. Coverage of social protection and labour in for Nicaragua and Honduras; Field total population (%) and Torero, 2004, for Peru; and Do and Iyer, 2008, for Viet Nam). Also, several Country's most recent value between 2008 and 2016 1 9.3 1.2 agrarian reforms have failed to be 16.4 3.7 16.9 30.4 comprehensive, only addressing the 19.2 18.2 (re)distribution land, but not putting 18.5 the necessary investments in place, 28.7 25.4 80.9 such as in infrastructure and input 68.8 35.8 distribution, as well as the transfer 25.8 of and better access High income Upper middle Lower middle Low income to markets (Holden and Ghebru, income income

2016). South East Asia has been More than one SPL benefit Only social insurance programme the exception: in East and South Only social assistance programme No transfer Asia, large land reforms contributed Source: ASPIRE, 2018. to building more equitable rural societies, which led to overall poverty reduction and low inequality instruments – like labour programmes levels (Sharma and Jha, 2018). – which can help mitigate risks and These reforms were accompanied build adaptive capacity (Figure 14). by infrastructure, extension, inputs An analysis of 96 countries shows and improved access to markets. that only 44 percent of the global population, and 56 percent of the The rural extreme poor lack poorest (the bottom 20 percent of supporting mechanisms, such as the welfare distribution), have access social protection and access to to social protection and labour finance, to cope with and manage programmes, and the coverage across risks. Extreme poor people are more different country categories varies vulnerable to climate shocks and (World Bank, 2018d). Most people in weather events (World Bank, 2016b), low-income and lower middle-income while they are the most unprotected countries are not covered by these and have the least access to coping programmes. In low-income mechanisms. In low-income and countries, coverage is much lower, lower middle-income countries, accounting for only 18 percent of the where most of the extreme poor live, population, while only 19 percent of people tend to have limited access to the bottom quintile has access to social social protection, insurance and other protection and labour programmes

25 ENDING EXTREME POVERTY IN RURAL AREAS

(World Bank, 2018d). The lack of poses an additional challenge for the these mechanisms increases the rural extreme poor. They have little probability that shocks will push money to use an account and may face households into extreme poverty, long distances and travel costs when keep them in extreme poverty or going to a bank branch or automated contribute to the transmission of teller machine (ATM). They are also poverty across generations. The rural often illiterate and lack basic financial extreme poor are most in need education, personal documentation, of supporting mechanisms, yet and self-confidence when interacting they have the least access to them with the formal financial system (Zezza et al., 2011; FAO, 2015a). (World Bank, 2017b; CGAP, 2016).

Lack of access to finance also hinders The extreme poor often experience the capacity of extreme poor people social marginalization. The extreme to manage risks. Formal financial poor are highly affected by social systems enable people to store money, exclusion. The symptoms of social send and receive payments and exclusion can be manifested mainly manage their finances (World Bank, through unequal access to resources, 2017b). Being able to save and access unequal participation, and denial credit allows people and businesses of opportunities (UNDESA, 2016). to plan and have long-term goals Differences along educational as well as to deal with shocks. attainment, health care, nutrition, With no safe and secure alternatives infrastructure and employment to save, people have to rely on riskier opportunities are symptomatic of and more expensive methods of many rural groups – indigenous managing their assets (CGAP, 2016). people, rural women, youth, Globally, 1.7 billion adults do not people with disabilities, and so have access to a bank account and on. These differences are often many of them are poor, especially accompanied by a lack of voice in women. Account ownership in rural political participation and civic life areas also tends to be lower than in (UNDESA, 2016). Social structures urban areas (World Bank, 2017b). and weak public institutions are often linked to social characteristics, Compared with other sectors of the defined by gender roles, ethnicity, population, becoming “bankable” or age, religion, status and . fully benefiting from banking services These factors are fundamental to

26 people’s livelihoods, and often highly due to great determine the capacity of the extreme inequalities, starting from early poor to move out of poverty. childhood development: social discrimination, violence, assimilation About one-third of the rural poor is policies in the education and health made up of indigenous, tribal and systems, and the dispossession caste groups (Hall and Patrinos, 2014). of land and denial of land rights These segments of the population (UNDESA, 2016, 2017). Their condition represent about 15 percent of the is exacerbated by gender inequality world’s extreme poor, while making and discrimination, with indigenous up only 5 percent of the global women often being the most population (Hall and Patrinos, 2014). affected and one of the poorest Evidence shows that indigenous groups (UNDESA, 2010, 2016). peoples tend to be poorer than the rest of the population (Hall and Social marginalization often prevents Patrinos, 2014), and they are often extreme poor people from accessing

Figure 15. Poverty reduction for Indigenous vs non-indigenous

Bolivia Ecuador Guatemala Mexico Peru China India Vietnam 1997-2006 1994-2006 1989-2006 1992-2008 1994-2005 1998-2002 1983-2005 1993-2006 0 -0.2 -0.8 -0.6 -0.8 -0.7 -0.5 -2 -1.3 -1.2 -1.7 -2.4 -2.6 -4 -3.8 -6

-8

-10

-12 -11.1 -12

% Annual change in poverty rate -14

-16

-18 -17.2

-20

Indigenous Non-indigenous

Source: Hall and Patrinos, 2014

27 ENDING EXTREME POVERTY IN RURAL AREAS

decent rural employment. In fact, divorced women may also be better off workers of specific social groups (Castañeda et al., 2018). Indicators of often experience difficult labour inequality within households can help conditions and hazards, informality, understand the extent to which poverty seasonality, and remoteness. is hidden from current statistics. For example, in India, fishing is Using undernourishment indicators as considered a low-income activity proxies of individual poverty, from a and tends to be overrepresented sample of 30 countries in sub-Saharan by the marginalized poor or tribal Africa, Brown et al. (2017) find that peoples (Kumar et al., 2017). roughly three-quarters of underweight women and undernourished Extreme poverty is sometimes children do not belong to the “hidden” in non-poor families in poorest 20 percent of households. rural areas as a result of power imbalances in the household. Deere and Doss (2006) demonstrate The current way in which monetary that gender inequalities, particularly poverty is measured does not allow between rural men and women, for a more accurate understanding are widespread in terms of asset of individual poverty, as it assumes ownership and land rights. The gender equal distribution of resources gap between men and women is in within household members. Taken as fact found for many assets, inputs and such, women do not appear to be services, including land, livestock, significantly poorer than men, and labour, education, extension and female-headed households do not financial services, and technology appear to be poorer than households (FAO, 2011). Women also face headed by men (Castañeda et al., additional constraints in terms of food 2018). This counter-intuitive result security and agricultural livelihoods is due to three factors: (1) some due to persistent discrimination, female-headed households may be de marginalization and social exclusion. facto responsible for the household, For example, customary laws related while having a husband working to rights (including land, in another location from which she property and housing), and access receives income; (2) households may to common natural resources (such identify a woman as the head when as pastures, water, and forests), can she is the breadwinner and therefore, curtail or even strip women of their on average wealthier; and (3) single or basic rights to these entitlements.

28 Rural women who become widowed In some societies, divorced and or separated may suffer social widowed women are subject to higher marginalization and loss of property social discrimination and stigma, rights and productive assets, thus which prevent them from having pushing them and their children into economic opportunities or joining poverty and destitution (ODI, 2014). social networks. Discriminatory gender Similarly, households headed by norms and customs, compounded by widowed women are more likely to women’s limited voice and agency, and live in extreme poverty, and face low factors such as gender-based violence labour capacity, high work burdens, and forced marriage, can also be time poverty, and limited mobility. important drivers of extreme poverty.

29 ENDING EXTREME POVERTY IN RURAL AREAS

Ending extreme poverty in rural areas: some important 4 considerations

educing extreme poverty countries (LMICs), partly because in rural areas by 2030 several low-income countries (LICs) will not be an easy have become lower middle-income task. While effective countries (LMICs) over the past few Rinstruments exist to address extreme decades. Of these, only five countries poor people’s needs, countries will (Bangladesh, India, Indonesia, Nigeria, also have to deal with structural and Pakistan) host the bulk of the constraints, socio-political events extreme poor in LMICs (Figure 16). and natural phenomena that are However, about 303 million of the outside their control and that extreme poor continue to live in may hinder poverty reduction. LICs, where the depth of poverty Numerous factors make up these (the poverty gap) is much higher. constraints: a vicious The highest numbers of extreme and government inefficiency, poor people amongst the LICs are economic cycles, ineffective found in the Democratic Republic investments, conflicts and climate of the Congo, Ethiopia, Madagascar, change. Structural transformation the United Republic of Tanzania, and plays an important role in Uganda (World Bank, 2018a). In LICs, overcoming these hurdles and the prevalence of extreme poverty ultimately, ending poverty. tends to be high. Countries with shares of extreme poverty that range from 4.1 The double bottom paradox 50 to 70 percent include Burundi, the Central African Republic, the Today, most of the poor do not live in Democratic Republic of the Congo, the poorest countries. In 2015, most of Guinea-Bissau, Madagascar, Malawi, the extreme poor – about 400 million Mozambique, Rwanda, Sierra Leone people – lived in lower middle-income and Togo (World Bank, 2018a).

30 The implication of the “double reduction in LICs. However, LICs bottom” in LICs and LMICs is will encounter complications when it that different approaches for the comes to implementing more direct eradication of extreme poverty will interventions. In fact, governments be needed, depending on where of poorer countries are generally extreme poverty is located (Sumner, less effective when it comes to 2012). In LMICs, inequality is still reaching the poorest through pervasive. While inequality between direct interventions (Ravallion, people in the world has been going 2016). As become down since 1990 (World Bank, 2016a), more developed, the tax base for within country inequality is higher redistributive policies expands, and than 25 years ago. Addressing income the task of reaching the extreme poor inequality will have to come hand becomes easier with urbanization in hand with eradicating extreme and higher institutional capacities. poverty (World Bank, 2016a). A more efficient redistribution of income LICs are concentrated in sub-Saharan lays the foundations of long-term Africa. Most of them have experienced economic growth, which in turn no economic growth in the last decade contributes to poverty reduction. and economic stagnation will likely Eradicating extreme poverty will persist (World Bank, 2016a; Chandy depend on the capacity of government et al., 2015). While estimates suggest institutions to design and effectively that extreme poverty will decrease implement social protection measures to 24 percent by 2030 (Chandy et al., and improve access to education, 2015), the region’s share of the global health and labour opportunities, extreme poor will likely increase. thus ensuring the social and The combination of large numbers economic inclusion of the poorest. of the extreme poor in the region, with slow economic growth and In LICs, international aid will a high poverty gap, illustrates the continue to play an important role complexity of ending poverty in in ensuring food security by building African countries (Chandy et al., resilience and supporting income 2015). Therefore, humanitarian aid generating activities for the poorest. approaches – and aid in general More indirect approaches, for example – in LICs will need to foster growth in the agricultural sector, institutional capacity and sectoral will have a higher impact on poverty growth, whenever possible.

31 ENDING EXTREME POVERTY IN RURAL AREAS

Figure 16. Top country concentration of extreme poverty in LICs and LMICs

Pakistan Bangladesh

India Nigeria Ethiopia Uganda Congo, D. R. Indonesia

Tanzania

Madagascar India 268.1 million Congo, D. R. 53.2 million Nigeria 84.8 million Ethiopia 27.4 million Bangladesh 24.1 million Tanzania 24.1 million Indonesia 15.1 million Madagascar 17.3 million Pakistan 7.7 million Uganda 17.3 million Total LMICs 401 million Total LICs 303 million

Source: World Bank, 2018a.

4.2 The role of labour achieved through the redistribution income growth of assets (particularly through land Labour income growth was the reforms), or by increasing the return highest driver of poverty reduction to the land held by the rural poor. during the 2000s (Inchauste et al., The equalization of human capital 2014). Labour income growth occurs assets (education, health) has also been through increasing returns to labour a key element in poverty reduction, (increased productivity), and through thus increasing returns to both land and higher participation in wage or labour for the poorest (Gil et al., 2016). self-employment (Gil et al., 2016). During the last decade, the increase Higher labour income is intrinsically of labour income per worker – more linked to higher growth in developing than an increase of employment – countries. In the past 25 years, has contributed the most to poverty economic growth has helped accelerate reduction (Inchauste et al., 2014). poverty reduction. However, since the In rural areas, particularly in South global financial crisis of 2007–2008, East Asia, labour income growth was the world economy has suffered from

32 a sustained slowdown, with growth poor in rural areas may lose out due to levels falling below previous forecasts structural changes in employment and (Debucquet and Martin, 2018). As a increased instability in international result, reductions in extreme poverty trade cycles. The rural extreme poor in rural areas will likely be lower are also more vulnerable to reforms than expected, and family farmers in agricultural trade and to shocks – in the poorest countries may fall such as food price spikes – because deeper into poverty (Debucquet and their consumption is more weighted Martin, 2018). Therefore, reducing towards food than the consumption of or eradicating extreme poverty in the non-poor (Winters et al., 2014). rural areas – particularly in LICs – via labour income growth will be quite Adding to that is the high uncertainty challenging, at least in the initial about the future impact of technology stages, and humanitarian aid will on job status and job creation, have to use more developmental type particularly in agricultural work. approaches and promote local growth. Technology can both destroy or create employment, but it is likely the skilled Trade also influences employment who will benefit the most from the generation and wages. introduction of new . has accelerated international trade Better working conditions, facilitated and the movement of capital across by technologies in the agricultural borders, driving processes of structural sector, can attract more rural youth transformation and increasing the to agricultural work, poor and availability of goods and services. non-poor alike. However, the poorest However, there is a straightforward will be disadvantaged in accessing relationship between trade liberalization these new job opportunities due to and poverty reduction (Winters et al., lower education and skills, as well 2014). While the strong presumption is as poorer health and nutrition. that international trade leads to poverty reduction in the long run, there is no 4.3 Inclusive and guarantee that its effects will always be pro-poor investment beneficial to the poor, particularly to the poorest. Trade liberalization creates Agriculture is central to structural winners and losers: while the rural transformation. However, in many poor may benefit from lower prices for developing countries the agricultural some goods and services, the extreme sector has lost traction as an engine of

33 ENDING EXTREME POVERTY IN RURAL AREAS

growth, particularly where the extreme leaving poor households without a poor live. Although investments in minimum income or mechanisms to agriculture have been increasing in effectively manage risks and shocks. developing countries, they continue Poor infrastructure also weakens to be insufficient, particularly in rural-urban linkages, limiting the those countries where most of the development of small towns and population work in the sector (FAO, cities, which play a fundamental role 2017c). While the share of investment in the diversification of rural incomes in agriculture in high-income in the off-farm sector, labour mobility countries continues to be higher than and the growth and nature of local the share of the sector in GDP, the food market systems (FAO, 2017a). share of investment in agriculture Security concerns in rural areas also is decreasing in the Middle East, create disincentives to investment. North Africa, sub-Saharan Africa and, to some extent, in Latin America FAO, IFAD & WFP (2015) estimated and the Caribbean (FAO, 2017c). that to end hunger, additional investments in agriculture, rural Rural areas lag behind urban areas in development and social protection terms of access to basic infrastructure would have to amount to USD (water, electricity, sanitation, roads), 265 billion a year during the period and public services (health, education, of 2016–2030 at the global level. connectivity). Rural women and girls Of this amount, USD 67 billion often disproportionately shoulder will be needed for social protection the domestic and economic burdens programmes to reach the poorest associated with the scarcity of basic in rural areas; and USD 198 billion services on account of their traditional will be needed for investment in responsibilities for fuel and water inclusive production and livelihoods collection, and food preparation. schemes, providing the poor with Insufficient access to quality health opportunities to earn, save, invest and care and education is a fundamental improve their standard of living. constraint to developing sustainable income generating activities. Reaching the rural poor depends Moreover, the coverage of both on public policy decisions that must contributory and non-contributory recognize the high transaction costs social protection and financial and long-term returns of supporting services is often limited in rural areas, the poorest. As Hancock (2006) points

34 out, dedicated technologies and a slowing in poverty reduction by approaches that adapt to different almost one percentage point (FAO, agroecological zones and local cultures IFAD, UNICEF, WFP and WHO, generate high transaction costs. 2017). Today, around 59 percent of the Extending inclusive investments extreme poor live in vulnerable and to reach the rural extreme poor, fragile contexts due to climate change particularly those living in remote and conflicts, or both (Development areas, requires adaptive strategies Initiatives, 2018) and about 56 percent which can overcome obstacles of the population of fragile states live (inaccessibility, low skills, basic assets in rural areas (FAO, IFAD, UNICEF, and services in the communities, WFP and WHO, 2017). In addition, mistrust from the local people, some 201 million people in 134 long negotiations, time-intensive countries are in need of humanitarian organizational and technical trainings, assistance for their survival, with a and so on). As investments are fifth of them being located in only never neutral, they must be carefully three countries: Syria, Turkey, and designed to bring about social benefits Yemen (Development Initiatives, 2018). and avoid threatening rural people’s According to UNHCR (2018), there livelihoods. In addition to a basic are also 68.5 million displaced people income through social protection globally, who have become part of the schemes, and basic health, education extreme poor as a result of losing their and nutrition, pro-poor investments assets and source of livelihood (FAO, should build on people’s own assets IFAD, UNICEF, WFP and WHO, 2017). and skills, strengthening their livelihoods and survival strategies, As global extreme poverty rates while creating new opportunities for decline, those left behind will income diversification (Hancock, 2006). be increasingly concentrated in contexts of institutional fragility 4.4 Conflict, climate change and conflict, mostly in sub-Saharan and extreme poverty Africa (World Bank, 2018c), and in areas affected by climate change Conflict and climate change are (Diwakar et al., 2017). Conflict is both making poverty reduction more a cause and an outcome of poverty challenging and threaten to reverse (Diwakar et al., 2017). Poverty rates in progress made so far. Each additional countries affected by repeated cycles year of violence is associated with of violence in the last three decades

35 ENDING EXTREME POVERTY IN RURAL AREAS

are on average 20 percentage points a declining share of agriculture in higher than in non-conflict countries GDP and agricultural employment; (FAO, IFAD, UNICEF, WFP and WHO, the development of modern 2017). On one hand, poverty can industrial and service sectors; and a induce conflict – struggles over land, demographic transition from high water and other resources; on the other to low birth and death rates (Mellor, hand, conflict can increase country 2017). Structural transformation also poverty levels, often reversing progress strengthens rural-urban linkages in in poverty reduction (FAO, 2018e). terms of production and markets, as well as rural-urban labour mobility, Climate change related events, such while fostering the growth of secondary as drought, flooding, and severe and peri-urban cities (FAO, 2017a). storms, also disproportionately affect rural communities living in extreme Virtually no country has gone poverty, because they rely to a greater through structural transformation extent on agricultural incomes and without a process of agricultural and natural resources for their livelihoods. rural transformation (FAO, 2017a). For example, climate variability and Agricultural transformation is both extreme weather events are key drivers a cause and effect of structural of the recent rise in global hunger, transformation, involving the shift and leading causes of severe food from primarily subsistence farming crises (FAO, IFAD, UNICEF, WFP to market-oriented and diversified and WHO, 2017). The World Bank production systems. FAO (2017a) (2016b) cautions that, if no action finds that rural transformation is taken, climate change could push includes agricultural transformation, an additional 100 million people as well as the emergence of the rural into extreme poverty by 2030. non-farm sector. Although agriculture’s relative share in the economy and 4.5 The role of structural in employment generation declines transformation in ending with transformation, it remains extreme poverty an important source of economic growth, employment and income Historically, poverty decreases as generation, as well as a safety net countries go through the process of for food security for many rural structural transformation. This entails: households during the process.

36 Moreover, the structures of economies, land reforms, investments in education, the state of transformation countries increased productivity of small-scale are in, and the growth of different producers, and the development sectors can influence extreme of a dynamic industry sector. poverty eradication. LICs are usually at the early stages of structural While fostering structural transformation: their economies transformation can accelerate poverty remain mostly agricultural with reduction, it is not the sole solution. low levels of productivity, which The political economy, along with hampers the development of other monetary and trade policies, often sectors. In LMICs, where structural determines investment and growth in transformation is ongoing, the main certain sectors or areas, which in turn problem lies in the level and quality of affect employment generation in rural economic inclusion of those left behind areas, the quality of jobs, and the level in the process of transformation of inclusiveness in the growth process and growth. For example, structural of poor and vulnerable people. To reach transformation has been more a sustained structural transformation, inclusive in South East Asia than in agricultural and rural development and Latin America, as a result of more rural transformation must be integrated equitable resource distribution through into the process (IFAD, 2016).

37 ENDING EXTREME POVERTY IN RURAL AREAS

Key elements in countries’ strategies for 5 ending extreme poverty

ational development A fundamental precondition approaches for ending for ending extreme poverty is poverty in all its forms, countries’ commitment. This entails including extreme a strong political commitment, Npoverty, are very different. They are including dedicated resources, strong shaped by national priorities and institutions and empowered citizens. circumstances, human and natural Successful countries, like China, Viet resource endowments, economic Nam and Brazil, tend to recognize and structures, ideas about social prioritize ending extreme poverty at the and , highest level of government (Box 1). political thinking, as well as A shared commitment – from political countries’ political economies. leadership to all different sectors of Development approaches are society – is needed to address the also shaped by the existence, root causes of extreme poverty, which or lack of, national ownership, are often structural in nature, such an enabling international as unequal access to or ownership environment, and demands of of resources, gender inequality, and civil society organizations and the social discrimination of certain social movements. Despite the populations. Effective political leadership different contexts and approaches, is a key factor in successful poverty some common lessons emerge reduction strategies: providing clear from countries’ experiences, policy direction and adequate means as they adapt to changes in of implementation; strengthening the economy, population, and creating effective and democratic environment and political context institutions; creating incentives for (May et al., forthcoming). multi-sectoral coordination; as well as monitoring and evaluating progress to

38 BOX 1 WHAT DO CHINA AND BRAZIL HAVE IN COMMON?

China and Brazil are two successful examples of how countries can reduce rural poverty, and in particular extreme poverty. While these countries are very different in many aspects, their experiences in poverty reduction share some common features. First, in both cases national economic growth played a determining role in reducing poverty, though it was not the only driver. The success of China and Brazil is also due to the fact that both countries made the eradication of hunger and poverty a political priority. This helped to focus public policies, foster public and private investments, and facilitate the implementation of complementary and mutually reinforcing policies and interventions across different sectors towards poverty reduction. Second, both countries focused on the role of agriculture in poverty reduction, looking especially at the role of small-scale producers and family farming in food security. China focused on giving incentives to farmers to produce through the Household Responsibility System, linking small-scale agricultural producers to the non-farm economy through agri-business and cooperatives and other non-agricultural enterprises at the town level. For Brazil, on the other hand, family farming was conceived as a major force to drive growth in the rural economy and to ensure food security and nutrition for all. Finally, both countries emphasized the role of coordination among different sectors and relied on the development of institutional mechanisms to improve the outreach of policies on poverty reduction (China) and hunger eradication, including food security and nutrition (Brazil).

Source: Takagi, M., and De La O Campos, A.P. 2017.

learn from experiences and improve The State cannot, however, combat strategies. Effective political leadership extreme poverty alone. Strategies for also helps to ensure the participation ending poverty must be directed of all (or most) sectors of society in and enabled by governments decision-making processes, such as through policies and programmes. women, youth, persons with disabilities, Incentives for all sectors of society older persons, and indigenous peoples. should be created to contribute to

39 ENDING EXTREME POVERTY IN RURAL AREAS

a common, sustainable strategy achieving macroeconomic stability which will ensure . and removing distortions derived The private sector in particular has from the overvaluation of its currency; an important role to play in ending eliminating monopsony of its cocoa extreme poverty, through leveraging marketing board; and adding targeted investments and social responsibility. programmes for cocoa farmers, such as the replacement of cocoa trees Apart from political commitment, with new varieties, and a free, mass the experience of countries spraying programme (Gill et al., 2016). points to three key elements for eradicating poverty, including While growth in agriculture has a extreme poverty (Gill et al., 2016). greater impact on poverty reduction compared to other sectors, its The first element is stimulating effect can be stronger or weaker pro-poor economic growth and depending on the structure of income generation opportunities. the country’s economy (including This means fostering a pattern of inequalities in the distribution of growth and structural change that resources), and the institutional generates employment – and in arrangements (Christiaensen et al., particular more productive, decent 2010). Therefore, agricultural growth and labour-intensive employment on does not automatically benefit a large scale – in sectors where the the extreme poor, particularly in majority of poor and extreme poor countries with greater inequalities people work. In several South East when it comes to access to resources Asian countries, pro-poor growth has – e.g. land, inputs, and irrigation. been achieved through agricultural Off-farm employment is also a crucial reforms, openness to trade and fiscal element for ending extreme poverty. prudence. Gill et al. (2016) highlight Employment, particularly decent that much of China’s impressive work, is the main channel through poverty reduction since the early which income derived from growth 1980s can be attributed to productivity can be widely shared within society. growth in agriculture. More recently, Such income enables people to lift Ghana used agricultural growth themselves out of poverty, benefit to reduce rural poverty through a from social insurance schemes, resurgence of its cocoa sector, using a and improve their educational and comprehensive approach that included: health status (UNRISD, 2010).

40 Ending extreme poverty and hunger different segments of agricultural value in rural areas requires generating chains, such as production, storage, employment, both in the agricultural processing and packaging, transport, and non-agricultural sectors, through and marketing. Locating some of these sustainable agricultural and rural segments in secondary towns can transformation. While agriculture is stimulate local, private-sector activities the main source of food and income and provide significant employment, for the rural extreme poor, promoting including for the rural extreme poor their participation in off-farm activities, (World Bank, 2017a; FAO 2017a). such as food transformation, processing and packaging, particularly in more A second element for effective favourable rural areas, is crucial extreme poverty eradication is for diversifying their livelihoods. the existence of a minimum set of Activities outside the food system, such investments at local, sub-national as environmental services in remote and national levels in both areas, can be particularly beneficial for social and productive capital. those with fewer resources, including Most successful experiences of the landless, women and youth. poverty reduction from the 1960s to Income diversification is crucial for the the present have involved substantial rural poor who do not specialize in investments in rural areas, particularly agriculture. However, the rural extreme in infrastructure, basic services, poor often lack the skills and the health, education, and more recently, capacities to engage in non-agricultural in social protection (Gill et al., 2016). activities, as they have limited access This strategy was successful in several to education and training (Box 2). countries in South East Asia – such as Therefore, dedicated programmes Indonesia, Korea, Malaysia, Taiwan, are needed to give the rural extreme and Thailand – where during the poor the skills that can take them out 1990s, large public investments in of poverty, either through the public education, health, and family planning education system or vocational training. were combined with market-led economic growth (Gill et al., 2016). Employment opportunities also In addition to growth in agriculture increase when rural areas are better and investments in education and connected to secondary towns. health, Viet Nam’s strategy also The demand of those towns can included some social assistance strengthen connections between programmes (Gill et al., 2016).

41 ENDING EXTREME POVERTY IN RURAL AREAS

BOX 2 INVESTING IN FOOD SYSTEMS AND PROMOTING SKILLS DEVELOPMENT FOR BETTER EMPLOYMENT OPPORTUNITIES IN RURAL AREAS

Off-farm income represents an important source of livelihood for many poor farmers. In places where there is a growing non-farm economy, members of poor households increase their incomes by engaging in part-time or full-time off-farm activities. Where few opportunities exist for agriculture, farm households may even abandon their land, and move to other agricultural activities (including fisheries or forestry), or into non-farming occupations in rural

© FAO/Dante Diosina © FAO/Dante or urban locations.

Educational and training programmes in rural areas have generally failed to recognize that many rural people, especially the youth, will derive part or all of their future incomes from off-farm or urban employment. There is a need for more vocational training for off-farm employment, which helps the rural poor, and particularly the rural extreme poor, better access skilled and semi-skilled jobs, while driving public and private investments towards the employment intensive activities that generate more jobs in the food system.

Staple crop production will continue to be important for agricultural livelihoods, but as incomes increase, diets will shift to higher value and processed products. Newer employment opportunities in the food system can be created through production diversification (from cereals to vegetables, horticulture, livestock, and fisheries and aquaculture), along with a deepening of value chains (with more food distribution, processing, value addition, and food preparation and services).

Source: FAO & World Bank, 2001; World Bank, 2017a.

42 Social protection14 is now recognized as the unconditional as a critical strategy for reducing programme, Dibao, in China; cash poverty and hunger and promoting and public work programmes under economic inclusion, particularly among the Productive Safety Net Programme the poorest. Although formalized by in Ethiopia; and the National Rural the definition of a specific Target under Employment Guarantee Scheme in SDG1, reaching this commitment was India – an employment insurance the result of a long evolution of the for rural workers (Gill et al., 2016). approach and scope. Social protection evolved from being a set of policies Cash transfers in particular are aimed at improving the conditions increasingly being adopted by of workers and addressing transient countries as an effective tool to fight poverty in the context of Europe’s poverty. Regular money payments nineteenth century industrialization, to poor households and socially to a system that can provide a marginalized groups provide a minimum set of guarantees to people minimum income to meet their basic through various stages in their lives. needs, relieving financial constraints and helping them access social services. Among the instruments of social With cash transfers, poor households protection aiming at reaching the can progressively engage and invest extreme poor and vulnerable are in more productive and profitable social assistance programmes, and agricultural activities. Regular cash non-contributory programmes in transfers allow the poorest to get cash or in-kind, which provide out of the poverty trap, generating regular and predictable support to higher incomes in the future through poor and vulnerable people. A few improved food security, and therefore examples of successful social assistance higher labour productivity, as well as programmes include: the conditional through small savings and investments. cash transfer programme Progresa Risks and crises are also better in Mexico (now called Prospera), managed when beneficiaries have and Bolsa Familia in Brazil, as well access to a steady source of income.

14 As defined by the Social Protection Inter-Agency Board (SPIAC-B), social protection refers to a “set of policies and programmes aimed at preventing or protecting all people against poverty, vulnerability, and social exclusion throughout their lifecycles, with a particular emphasis on vulnerable groups.

43 ENDING EXTREME POVERTY IN RURAL AREAS

In addition to social protection, several their risk management capacities. countries, starting in South Asia, Microfinance schemes are important have focused on increasing access to components of many poverty finance for the poorest, helping to reduction programmes around the break the cycle of poverty by investing world, as they allow even the poorest in their livelihoods and improving individuals to access more formal

BOX 3 CASH TRANSFERS: MYTHS vs. REALITY

Over the past ten years, a growing number of sub-Saharan African governments have launched cash transfer programmes as part of their social protection strategies. Most of them are unconditional programmes, aimed at improving the food security, health, and nutritional and educational status of extreme poor households and children. The livelihoods of most beneficiaries are based on and rural labour, with most recipients living in places where markets, including financial services,

© FAO/Ivan Grifi © FAO/Ivan are limited or inadequate.

However, there are still many myths around cash transfers, including: the cash received is wasted on alcohol and tobacco; transfers are just a “hand-out” and do not contribute to development; they cause dependency and laziness; and they lead to price inflation and disrupt the local economy. Yet, evidence to the contrary is proving these perceptions wrong. FAO and UNICEF have evaluated the impact of cash transfers on poverty reduction in seven sub-Saharan African countries, and results show that these programmes generate a broad range of social and economic impacts, including enhancing the economic and productive capacity of poor rural households.

44 First, cash transfers contribute to human capital development, reducing the economic barriers to access education, nutrition and health services, contributing to food security and dietary diversity, preventing child labour and helping address the economic and social drivers of HIV risks. In this sense, these programmes also contribute to the future productivity and employability of today’s children and adolescents, once they reach working age. Most of the programmes also show significant increases in secondary school enrolment and children’s well-being.

Second, cash transfers stimulate the economic potential of the poor. Access to predictable and regular income enhances the economic and productive capacity of even the poorest people, helping them accumulate assets, invest in more productive activities and better manage risks. In Zambia, cash transfers increased operated farmland by 36 percent from the baseline, improving the use of seeds, fertilizer, and hired labour. As more agricultural inputs were used, overall production also increased, improving food and income security, and access to markets, while having a positive impact on the local economy.

Finally, cash transfers lead to positive multiplier effects in local economies and significantly boost growth in rural areas. Benefits expand beyond direct beneficiaries, reaching the wider community. In Ethiopia, for every dollar transferred by the programme, about USD 1.50 was generated for the local economy and no inflation was detected. Across all countries, there was no evidence of increased expenditure on alcohol and tobacco, and in Lesotho, alcohol expenditure actually decreased.

FAO’s work has strengthened the case for scaling up such programmes by addressing public misconceptions linked with cash transfers and setting up collaboration with national governments for programme design and implementation. Social protection is now seen not only as a social policy tool, but also as a strategic investment which can enhance the economic and productive potential of the poor. The evidence produced has influenced the design of national programmes, contributing to the expansion of social protection coverage in different countries and the shift from donor-funded pilots to domestically-funded national strategies.

Source: FAO & UNICEF, 2017.

45 ENDING EXTREME POVERTY IN RURAL AREAS

BOX 4 LINKING SOCIAL ASSISTANCE TO DEVELOPMENT INTERVENTIONS

Governments and NGOs have been exploring ways to link social assistance, mainly regular cash transfers, to other types of support, such as livelihood interventions, skills building, nutrition interventions, and more (Roelen et al., 2017). For example, FAO’s approach to coherence between social protection and agriculture, including the concept

© FAO of “Cash Plus” (FAO, 2016b), combines social assistance interventions, such as cash transfers, with productive assets, inputs or technical training and extension services to enhance the livelihoods and productive capacities of poor and vulnerable households. In the long term, the approach aims to progressively enhance capacities, while facilitating entry to sustainable markets and broader opportunities. Cash Plus programming ensures that families have what they need to restore or improve their livelihoods, while enabling them to meet their immediate needs. Other approaches have been developed under the concept of “graduation”, based on the model pioneered by BRAC in Bangladesh. The package in “graduation” type programmes generally includes regular cash transfers, access to savings, productive assets, livelihoods training and behaviour change communication (Roelen et al., 2017).

At programme level, different models of complementary interventions have been implemented, which can be classified in three main categories (Veras Soareset al., 2017): • Sustainable livelihoods, economic inclusion or productive inclusion programmes – single programmes with multiple components, including microcredit and/or cash transfers, and other productive inclusion or self-employment promotion interventions. • Complementary programmes – different programmes/interventions involving two or more sectors, which are implemented in a coordinated manner (such as social protection programmes with productive inclusion programmes). • Overlapping programs – unplanned overlap of different sectoral programmes at the individual/household or geographical/community level.

46 credit. In Bangladesh, the Grameen which address the specific needs of Microfinance approach helps build the poorest and their challenges. up household credit and cultivates Though social assistance is no doubt savings habits. While the impacts of instrumental for the extreme poor, and microfinance on poverty reduction has shown significant impacts across are still inconclusive (Banerjee and social and economic sectors, it is not Jackson, 2016; and Bel Hadj and Rejeb, sufficient to eradicate extreme poverty 2015), these programmes are shown (Veras Soares et al., 2017; Roelen et to empower women and smooth al., 2017). Sustaining these impacts in consumption, particularly after a shock the long term requires more dedicated occurs. For example, in Bangladesh, support and more holistic interventions consumption is twice as stable for to enable access to services, provide Grameen Bank borrowers compared support and cultivate behavioural with non-borrowers (Gill et al., 2016). change. Social assistance – such as cash transfers and school feeding – A third essential element for combined with other interventions, ending extreme poverty is setting can support inclusion in economic up dedicated interventions to opportunities while addressing the reach the poorest of the poor. social barriers that prevent the poor In recent years, poverty reduction from actively participating in society has stagnated both in low- and (FAO, 2016b; May, et al., forthcoming). middle-income countries due to the global economic slowdown and Today, concerns over political fragility, increasing conflict, with those still left climate-related shocks and their behind becoming harder to reach. effects on poverty are also influencing Among these people are indigenous the design of poverty eradication and ethnic minorities, those living interventions. To build poor people’s in remote areas, and disadvantaged resilience to climate-related shocks groups who have not benefitted from and crises, these interventions tend economic growth or human capital to incorporate risk-informed and investments. Recognizing the need to shock-responsive mechanisms, better articulate and coordinate the different livelihood enhancement, different policies and actions aimed and risk-management strategies at reducing poverty, some countries (Box 5). For instance, countries have opted to implement more have started reinforcing the dedicated and integrated interventions capacity of existing social assistance

47 ENDING EXTREME POVERTY IN RURAL AREAS

BOX 5 INDIA: THE NATIONAL RURAL LIVELIHOODS MISSION

About a third of the world’s poor and hungry live in India and most of them depend on agriculture and the rural economy for their livelihoods. Recognizing the rural poor as active participants of development, the Government of India has set up the National Rural Livelihoods Mission, one of the world’s largest rural development programmes, covering all States in the country. Launched in 2011, NRLM aims to reach out to 70 million poor rural households in 600 000 villages in India, representing about 25 percent of the world’s poor. Beneficiaries include poor and extreme poor people, with a focus on single women and women-headed households, victims of human trafficking, particularly vulnerable tribal groups, persons with disabilities, as well as landless and bonded labourers.

NRLM aims to reduce poverty in rural areas by building strong and effective institutions for the poor to increase their access to markets, services, job opportunities and decision-making. Self Help Groups (SHGs) are the primary building block of NRLM and are composed of 10-20 poor people who gather on a voluntary basis. Through the programme, SHG members receive the knowledge, skills and tools needed to improve and diversify their livelihoods. This includes financial literacy and counselling on financial services to increase their creditworthiness. NRLM also provides people’s institutions with revolving funds and community investment funds until they accumulate their own funds. These resources aim to strengthen poor people’s institutional and financial management capacities, and build their track record, so they can access bank credit, meet the credit needs of the members and fund collective activities.

NRLM also supports the creation of community savings groups, which help the poorest to meet their financial needs and reduce the exploitative influence of money lenders over asset-less and landless people. Savings groups are essential to foster financial inclusion, providing a form of collective collateral for members to acquire credits from formal financial institutions. To facilitate universal access to financial services, NRLM also coordinates with the financial sector to increase the portfolio of saving, credit and insurance products available for the poor.

The programme also works to improve rural livelihoods in both farm and off- farm sectors. To do so, NRLM supports the development of activity and trade clusters of farm and non-farm enterprises, to improve productivity, quality and cost

48 © FAO/Dakshina Murthy

competitiveness, and create pro-poor markets through aggregation of rural producers and market players. The project supports the creation of producer groups and their federations, which receive training on enterprise management, productivity and quality enhancement, and value addition. NRLM also looks at the sustainability of rural livelihoods. To protect the natural resource base, farmers receive training on practices through the Farmer Field School, including the use of organic fertilizers, poly-crop farming, and botanical pesticides. SHG members become trainers themselves, helping to spread the knowledge in their own village.

Since, 2017 FAO and the Government of India have worked together to scale up the impact of NRLM on poverty reduction. FAO has provided training to State Rural Livelihoods Missions to design and manage the livelihood activities under their programmes, and it supports the Government’s community-based mobilization efforts to reduce rural poverty, empower women, and improve sustainable food agriculture systems. One of the beneficiaries of this collaboration is India’s Self Employed Women’s Association (SEWA), which is an organization of 1.9 million poor self- employed women workers assisting marginalized women farmers and informal sector workers through social mobilization campaigns and capacity development. Thanks to FAO, members are learning about business planning, and asset development, as well as agroecology and low-input organic farming techniques for improved resilience.

Source: FAO, 2018g.

49 ENDING EXTREME POVERTY IN RURAL AREAS

programmes to anticipate risks sectors to achieve poverty reduction and boost responsiveness (FAO, (Veras Soares et al., 2016; Cirillo et al., 2017f). Moreover, agriculture 2017; Leyton, 2018). First, multisectoral and weather-indexed Insurance coordination mechanisms need to stands to protect people from have clear objectives, responsibilities, destitution and from falling deeper and decision-making power to be into poverty when shocks occur. effective, and have the necessary Micro-insurance services include budgets and incentives to operate compensation schemes covering (CONEVAL, 2018). As Leyton (2018) the loss of assets – crop failures, notes, budgetary incentives can livestock mortality or theft, health, lead to better coordination between death, loan protection, and shelter ministries and their programmes. provision. Agricultural insurance is Second, common (or coordinated) particularly relevant for poor fishers information systems and registries and farmers, as climate change and of the poor and the poorest, when crop and animal diseases can have available, allow the design and disastrous effects on their livelihoods. implementation of appropriate policies and programmes to address poverty While policy coherence15 and and direct investments (Cirillo et al., multisectoral coordination of social 2017). At territorial level, the existence and economic sectors can enhance of committees on poverty reduction, the impact of poverty eradication formed by different entities from policies and programmes, achieving both public and non-governmental coordination from the national to the sectors – NGOs, civil society, producer territorial level can be challenging organizations – also helps to share (Gravilovic et al., 2016; Veras Soares et information, enhance coordination al., 2016; OECD, FAO and UNCDF, and oversee the implementation of 2016; Leyton, 2018). Experience from programmes and private initiatives Africa and Latina America points to (CONEVAL, 2018, Cistulli et al., 2016). some lessons learned in working across

15 Coherence is understood as “a systematic promotion of complementary and consistent policies and programmes across sectors, thereby creating synergies to combat rural poverty and food insecurity more effectively” (Gavrilovic et al., 2016).

50 Sustaining livelihoods: how can agriculture, 6 food systems and sustainable management of natural resources accelerate the achievement of Target 1.1 in rural areas?

Agriculture not only plays a key role and natural resources can contribute in the transformation of the economy to reaching Target 1.1 and ending – particularly in rural areas – but rural extreme poverty: (1) ensuring it is also crucial in ending extreme food security and nutrition for poverty. In developing countries, extreme poor people in rural growth in agriculture has proven areas; (2) promoting the economic to be more poverty reducing than inclusion of the rural extreme poor in growth in other sectors, having agriculture and food systems using bigger impacts on the rural extreme territorial and landscape approaches; poor, in the poorest countries (3) fostering environmentally (Ligon and Sadoulet, 2007).16 sustainable livelihoods; and (4) strengthening resilience against There are four main areas through shocks and restoring livelihoods. which agriculture, food systems

16 A global study of 82 countries shows that aggregate growth originating from agriculture is four times more powerful (in terms of reducing extreme poverty) than growth in industry and service sectors (Christiaensen et al., 2010).

51 ENDING EXTREME POVERTY IN RURAL AREAS

6.1 Ensuring food security and legumes), and higher-value and nutrition of extreme foods (such as fish, milk, meat, poor people in rural areas eggs, fruits and vegetables). These activities can also enhance the The right to adequate food is a resilience of extreme poor households long-standing human right guaranteed in humanitarian settings. Policy tools through various international to grant food security include asset instruments, foremost the International transfers, such as small animals and Covenant on Economic, Social and livestock, building fish ponds, and home Cultural Rights to which 168 countries and school gardens. Another important are States parties. Moreover, around tool is social protection, particularly 30 countries currently have explicit nutrition-sensitive social protection, protections of the right to adequate which includes regular cash food in their national constitutions, transfers with reinforced linkages to while several dozens more have nutrition education, health services, implicit recognitions. The right to and school food programmes, adequate food refers to the right particularly in marginal areas. of every individual to have assured access to adequate, nutritious, and Decent employment measures culturally appropriate food necessary are also needed to empower poor for an active and healthy life. To enjoy rural populations, helping them the right to feed oneself in dignity, become central actors in ensuring individuals can either grow the food the realization of their right to themselves, acquire it or receive it adequate food. The recognition of the (FAO, 2015b). Access to sufficient poor as agents of change, as well as food in a regular way is necessary to policies to foster decent employment allow adults to engage in productive and the expansion of social protection activities, and for children to acquire is essential for eradicating extreme the necessary education and skills poverty. This entails the existence of they will need to overcome poverty. participatory policy dialogue platforms and initiatives to develop the capacities Incomes and the right to food can be of women and men towards building assured by supporting subsistence collective action and interacting in agricultural activities of the poor, policy dialogue. Emphasis should be which provide them with minimum placed on ensuring the legal protection access to basic staples (grains, tubers of the right to food and freedom from

52 hunger, with all vulnerable populations disconnect between agricultural, being covered through social protection nutritional, environmental and social as well as other mechanisms. assistance interventions and broad economic development strategies. 6.2 Promoting the economic inclusion of the rural In many cases, existing poverty extreme poor in agriculture eradication strategies implemented and food systems using by ministries with social and rural territorial and landscape development mandates are limited, approaches institutionally, particularly when linking the extreme poor to markets. Agriculture is often not well-embedded Though these ministries are often in poverty eradication strategies or weak in terms of providing new and given the prominence that it deserves sustainable economic opportunities in terms of both policy prioritization for the poor, they are stronger in and public resource commitments terms of identifying the poor and the or investments. In addition, the lead extreme poor: providing them with mandate to deal with poverty issues access to food and a minimum income at country level is often given to to sustain their ; and the ministries of social affairs rather ensuring minimum infrastructure and than the ministries of agriculture microcredit to invest in their future. or the environment. As a result, agricultural policies – including trade These gaps highlight the need to related policies – tend to neglect the better articulate agricultural, food extreme poor, especially those who and environmental policies with do not have access to productive poverty eradication, inequality natural resources, such as landless reduction and decent work workers and “livestock-less” herders. promotion strategies. In particular, Often considered unproductive, the better coordination is needed among rural extreme poor tend to be excluded the various line ministries implementing from economic growth interventions; poverty eradication strategies to ensure instead, they are considered potential that their interventions complement participants of social assistance and capitalize on each other. This will programmes, when present. A lack help place the focus of economic of policy coherence and coordination interventions on the poorest and most among ministries perpetuates the marginalized people. Social protection

53 ENDING EXTREME POVERTY IN RURAL AREAS

programmes can be linked to actions linked to liquidity contrasts, limited aimed at boosting agriculture and access to financial services, and other off-farm employment, such as economic barriers in adopting new forestry, fisheries and environmental technologies or meeting the demands services, and rural infrastructure of new markets. One way to make development. These programmes are markets more beneficial to small-scale strengthened through coordinated producers is through developing local or compatible targeting mechanisms or territorial markets. This helps small and complementing interventions, agricultural producers, including the including cash+ programmes poorest, sell their produce at low or homegrown school feeding. transaction costs, while promoting the Moreover, by articulating agricultural, supply of quality products for small food and environmental policies cities and towns in the surrounding with poverty eradication, inequality areas. Local market development also reduction and decent work promotion fosters collective action, helping poor strategies, the poorest of the poor producers gather into associations can be included in the development (FAO and INRA, 2016), which can process. Engaging the poorest of the provide a series of socially relevant poor in income generating activities – services, such as credit and insurance. which fit their aspirations, capacities, Programmes for poor agricultural knowledge and assets – either in the producers will require: dedicated on- or off-farm sector, helps them find market-oriented services (including their own pathways out of poverty. financial, business and market support); rural advisory and extension Market access is key to improving services; and the provision of adequate the incomes of extremely poor inputs and appropriate technologies. small-scale producers. The process of Furthermore, market-oriented support urbanization increases the demand for systems need to consider women’s quality food and non-food products, and men’s diverse and changing creating new opportunities for income roles in agricultural value chains. generation. However, extremely poor producers often face several Economic inclusion can be constraints in taking up these also achieved through public opportunities, including meeting the procurement schemes, short-circuits demand of consumers in terms of and branding. Several governments production levels and quality. This is are implementing public procurement

54 initiatives that facilitate the purchase of men in decision-making, and food – for public schools and hospitals, improving access to productive for example – directly from small-scale resources, services and economic producers to strengthen rural opportunities. Territorial rural livelihoods and promote food security development approaches are key to and nutrition. These preferential including the poor in the development markets allow small-scale producers to process. These approaches focus gain experience and raise the quality of on empowering local communities, their products, including by complying including those traditionally with safety regulations and meeting excluded, by involving them in the scale of new markets and demand. the design of development plans However, to succeed as a mechanism and strategies, enabling them to for economic inclusion, instruments participate in multi-sectoral and and regulations need to be adapted multi-stakeholder coordination to give poor producers advantages mechanisms, and addressing their over larger suppliers (FAO, 2018b). constraints in accessing markets. For these opportunities to reach the Similarly, participatory landscape poorest, dedicated programmes for approaches enable the development extreme poor producers need to be of more sustainable solutions to implemented along the value chain, localized natural resource challenges. improving access to resources and services, strengthening organizations, 6.3 Fostering environmentally and offering training to the poorest sustainable livelihoods so that they are not left behind (see Ghana case in the previous Interventions that enhance the section). In more favourable areas, governance of tenure and preserve economic inclusion can also be or revitalize natural resources can achieved through successful branding: directly benefit the extreme poor, fair trade, organic, agroecology, particularly those living in marginal and geographical indications areas, by securing their livelihoods (Vandecandelaere et al., 2018). and helping them adapt to the effects of climate change. Actions to improve Finally, empowering people the governance of tenure systems deal is fundamental for economic with recognizing the legitimate tenure inclusion. This entails addressing rights of people to use, manage and inequalities between women and control land, fisheries, and forests.

55 ENDING EXTREME POVERTY IN RURAL AREAS

The application and implementation in rural areas depend on access to of the Voluntary guidelines on the water, forests, fisheries, and land to responsible governance of tenure of sustain their agricultural livelihoods. land, fisheries and forests in the context Climate change, land degradation, of national food security contribute to pollution, and the depletion of the improvement and development of natural resources and biodiversity legal and organizational frameworks are amongst the major impediments regulating tenure systems, enhancing to the sustainability of livelihoods transparency as well as the capacity of indigenous peoples, pastoralists, of all persons concerned with tenure forest people, and fisher folks – who governance (CFS and FAO, 2012). also tend to be the poorest and most These actions are particularly important marginalized communities in society. in the current context of escalating Some policy actions include: enhancing killings of human and environmental local knowledge or introducing rights defenders. Reports of these new techniques for the sustainable killings worldwide in 2017 – based on management of resources; promoting 312 killings in 27 countries – document climate-smart and organic agriculture; that 67 percent of the persons killed and preserving and promoting were engaged in the defence of land, ecosystem services. Climate adaption environmental and indigenous peoples’ and mitigation efforts also require rights. nearly all killings took place in better coordination and integration with the context of megaprojects, extractive poverty reduction interventions (see box industry and big deals.17 Such projects 5). Innovative and holistic responses are frequently undertaken without can help counteract the potential consulting the local population, or negative impacts of climate change seeking the right of free, prior, informed and natural resource depletion on the consent (Human Rights Council, 2018). livelihoods of rural populations and the extreme poor. Likewise, initiatives Natural resources and ecosystem aimed at eradicating extreme services are the basis for sustainable poverty would benefit from the and productive food and agricultural integration of responses which sustain systems. Many of the extreme poor environmentally fragile livelihoods.

17 About 80 percent of the killings took place in only four countries: Brazil, Colombia, Mexico and the Philippines (Human Rights Council, 2018).

56 BOX 6 PROEZA: AN INTEGRATED APPROACH TO FIGHT EXTREME POVERTY AND CLIMATE CHANGE

In Paraguay, more than two-thirds of the extreme poor are self-employed in agriculture and climate-sensitive activities. Many of them are indigenous people, who live in remote areas, lack resources and ownership rights, and depend on natural resources – such as wood and charcoal – to meet their basic needs. This makes them extremely vulnerable to climate change

© FAO and other shocks.

Firewood and charcoal are used to dry grains for export, produce ceramics, and as the primary energy source in the bottling industry. However, agricultural expansion and fuelwood harvesting are contributing to one of the highest deforestation rates in the world. In fact, land use change has led to increased greenhouse gas emissions in the country, and major biodiversity loss from the Atlantic Forest – considered the region’s most important biome for biodiversity.

Despite increased public efforts to decrease deforestation in recent years, progress has been slow due to the weak enforcement of environmental legislation and regulation, and limited institutional capacity, resulting in overlapping and at times conflicting institutional responsibilities and weak governance. FAO and the Government of Paraguay have formulated the Poverty, Reforestation, Energy and Climate Change (PROEZA) project to improve the resilience of poor and extreme poor households to climate change, through risk-informed social protection, while combating deforestation, and mitigating greenhouse gas emissions. This USD 90 million project, approved by the Green Climate Fund, will support the transition to sustainable forest management to reduce forest loss and improve the lives of around 17 000 extreme poor families (nearly 87 300 people) in eight departamentos of Eastern Paraguay.

PROEZA consists of three mutually reinforcing components. The first one specifically targets extreme poor households, as they are highly dependent on natural resources

57 ENDING EXTREME POVERTY IN RURAL AREAS

for their daily domestic needs and food security. Adaptation to climate change is only possible if efforts to reduce poverty are combined with climate knowledge and improved productive practices, which is why PROEZA tops up the national conditional cash transfer programme Tekoporã, and supports the establishment of climate-smart agroforestry production systems, combining income generation with environmental protection. These systems will enhance the resilience of vulnerable households by providing firewood and income in the short run, and by accumulating capital – in the growing tree stock – in the long run.

In addition, conditional cash transfers for environmental services will be set up – serving as environmental services incentive payments – until new farming models are sustainable. With one-third of the beneficiaries lacking secure land rights, PROEZA will also support households throughout the land titling process. Secure rights will stimulate long-term stewardship of forest resources and investment in their sustainable use. A recent analysis of policies and institutions in the agricultural and rural sectors of Paraguay shows the limited ability of government entities to achieve effective interagency coordination, especially when it comes to agricultural, environmental, social protection and bioenergy programmes. One of the main instruments set up by PROEZA to improve coordination and governance is the inter-institutional Executive Committee, which gathers representatives from institutions with a direct national mandate to implement the Climate Change National Policy, the National Reforestation Plan, the Poverty Reduction Programme and the National Development Plan. Chaired by the Technical Secretariat of Planning, it will coordinate and oversee the execution of the project.

Source: FAO, 2017b.

6.4 Strengthening resilience non-poor living in these contexts are prior to shocks and restoring also at risk of falling into extreme livelihoods after these occur poverty because of serious shocks, particularly violent conflicts. Today, about 59 percent of the extreme poor live in vulnerable and fragile Many actions are needed to enhance contexts due to climate change preparedness, build resilience, as well and conflicts. The moderate and as restore the livelihoods of people

58 who have been affected by conflict system include: timely, effective and or climate-related shocks, such as efficient responses to extreme weather famine, earthquakes and extreme events; flexible implementation to weather events. One is integrating scale-up support in case of threats or assessments of the rural extreme crises; inclusion of early action plans poor’s specificvulnerabilities to and contingency funds triggered by disaster-related conflicts, weather early warning systems; and support events (cyclones, floods, droughts, for public work programmes to severe winters), pests and diseases increase household income through in the early warning and early the diversification of livelihoods. action systems. These actions can lead to the formulation of early Finally, agricultural interventions adequate responses, which can can also play a key role in prevent risks from developing restoring livelihoods after shocks into crises, thus reducing the cost occur. For example, humanitarian of response. Conflict-sensitive programmes can help restore the analysis is a second tool that helps necessary conditions for agricultural to address the root causes of social livelihoods, including rebuilding conflict, including chronic low-level basic water infrastructure – water conflicts over access to resources systems and post-harvest facilities, or claims to services, which tend such as fish landing sites and markets. to increase extreme poverty. Other important interventions include: reclamation and restoration Social protection systems and processes; the rehabilitation of measures contribute to increasing households’ productive capacities the resilience of the extreme poor, (e.g. replacement of lost fishing helping them to effectively cope boats and equipment); distributing with the negative impacts of climate agricultural inputs, seeds and tools; change and natural disasters. The key and safeguarding the rights of components of a risk-informed and the poorest and most vulnerable shock-responsive social protection in humanitarian situations.

59 ENDING EXTREME POVERTY IN RURAL AREAS

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70 This report is primarily directed towards decision-makers responsible for designing and implementing national policies and programmes to achieve Sustainable Development Goal 1 (No poverty) and in particular Target 1.1 on eradicating extreme poverty by 2030. It will also be of value to development partners, public and private actors, including investors, researchers and technical practitioners, involved in the broad area of food and agriculture, and rural development. Building on FAO’s mandate to achieve Zero hunger, No poverty and sustainable management of natural resource, this publication presents how agriculture, food systems and sustainable management of natural resources can accelerate the achievement of Target 1.1 in rural areas.

ENDING to leave no one behind one no leave to Sustaining livelihoods Sustaining IN RURAL AREAS EXTREME POVERTYEXTREME

ENDING EXTREME POVERTY IN RURAL AREAS FAO

ENDING to leave no one behind one no leave to Sustaining livelihoods livelihoods Sustaining 310274 CA1908EN/1/10.18 IN RURAL AREAS RURAL IN 9251 EXTREMEPOVERTY 8 978-92-5-131027-4 97 ISBN Sustainable Development Goal 1, ending poverty in all its forms, Agenda. This Goal , is the most ambitious goal set by the 2030 everywhere poverty in the next 12 years, which will includes eradicating extreme interventions. in addition to broad-based focused actions more require the 1.1 and overcome The question is: How can we achieve target of a deeper understanding many challenges that lie ahead? By gaining in particular, poor rural and the characteristics of the extreme poverty, those most in need. reach the right policies can be put in place to food systems the contribution that agriculture, presents This report the can make to securing and the sustainable use of natural resources in our world. who struggle livelihoods of the millions of poor people