Issues in Poverty Reduction and Natural Resource Management

Home , Natural resource, Poverty reduction, Resource, Resource curse

OCTOber 2006 This publication was produced for review by the United States Agency for International Development. It was prepared by the Natural Resources Information Clearinghouse, an operation of Chemonics International. ACKNOWLEDGEMENTS Much of this material comes from a seminar series jointly organized by the USAID Poverty Reduction and Natural Resources Management Offices. Jon Anderson of USAID’s Land Resources Management Team (LRMT), Victoria Rames of USAID’s Poverty Analysis and Social Safety Net (PASSN) team, and Carol Hansen of the Natural Resources Information Clearinghouse (NRIC) organized and directed eight presentations from October 2004 to March 2005. USAID thanks the presenters and support staff who helped make the series possible; the speakers are listed in Appendix B. Jon Anderson of LRMT and Steve Nelson of NRIC researched and wrote much of this document. Kelly Scannell, Joanna Smith, and Steven Swierenga provided valuable research and editing support. We would also like to thank those who reviewed and commented on the document, including David Hess, Tim Mahoney, Borany Penh, Jeff Brokaw, Christopher Barrett, Peter Veit, and Allyn Moushey. The relation between poverty and natural resources is complex and dynamic. This publication does not pretend to be the definitive work on the topic. It is a work in progress, and comments, contributions, and suggestions are welcomed. For more information, please contact: Jeff Brokaw USAID Land Resources Management Team 1300 Pennsylvania Avenue, NW Washington, DC 20005 [email protected]

The Natural Resources Information Clearinghouse (NRIC) is funded by the U.S. Agency for International Development (USAID) under the BIOFOR IQC (LAG-I-00-99-00014-00, Task Order 09) and is implemented by Chemonics International Inc., Environment International, PA Government Services, and Virginia Polytechnic Institute and State University. Issues in Poverty Reduction and Natural Resource Management

The author’s views expressed in this publication do not necessarily reflect the views of theU nited States Agency for International Development or the United States Government. acronyms

ACOPOF community Forestry Association of the Peten (Guatemala) CBNRM community-Based Natural Resources Management CIFor center for International Forestry Research CONAP consejo Nacional de Areas Protegidas (Guatemala’s Council on Protected Areas) es environmental Service Fao united Nations Food and Agriculture Organization FEWS NET Famine Early Warning System Network FPIC Free, Prior, and Informed Consent GIs geographic Information System IMF International Monetary Fund LFa less-Favored Area LIFe living in a Finite Environment Program (Namibia) LRMt usaID Land Resources Management Team MACH Management of Aquatic Ecosystems through Community Husbandry (Bangladesh) MBR Maya Biosphere Reserve MDG Millennium Development Goal ngo nongovernmental Organization NRIc natural Resources Information Clearinghouse NRM natural Resources Management Passn usaID Poverty Analysis and Social Safety Net team PES Payment for Environmental Service PR Poverty Reduction PRSP Poverty Reduction Strategy Paper TFca transfrontier Conservation Area un united Nations UNEP united Nations Environment Programme USAId u.S. Agency for International Development WRI World Resources Institute contents

Section I: Introduction ...... 1

Section ii: Natural Resources and the Poor ...... 3

Section iii: Governance and Social Dimensions ...... 11 Case Study: Guatemala Forestry Concessions ...... 16

Section IV: Risk, Vulnerability, and Poverty Traps ...... 19

Section V: Markets and Trade ...... 23

Section VI: Marginal Lands and Migration ...... 27 Case Study: Bangladesh Fisheries Management ...... 32

Section VII: Corruption and Conflict ...... 35

Section VIII: Distribution of Environmental Costs and Benefits ...... 39 Case Study: Namibia Wildlife Conservancies ...... 42

Section IX: Conclusion ...... 45

APPENDIX A: Additional Suggested Readings and References ...... A-1

appendix B: List of Presenters ...... B-1 contents

TABLES table 1: Contribution of Forest Management operations to Income of Members of community concessions and cooperatives ...... 17

table 2: Returns on Investments in China—Impacts on Poverty Reduction (Persons/10,000 Yuan Invested) ...... 28

figures FIgure 1: Nature, Wealth, and Power—Definitions and Links ...... 4

Figure 2: Annual Deforestation Rates for the Peten egion of Guatemala ...... 17

Figure 3: Herd Size Thresholds and Poverty Traps ...... 20

Figure 4: Role of Remittances in Foreign Investment ...... 29

Figure 5: Fish Yield and Fish Sanctuaries in MACH Sites ...... 33

Figure 6: Micro-credit Support Through MACH ...... 33

Figure 7: Increases in Income in MACH Sites ...... 33

Figure 8: Increase in Wildlife Populations in Namibian onservancies ...... 43

Figure 9: CBNRM Spending Versus Contribution to namibian Net National Income ...... 43 sectIon I: IntroductIon

overty is a global problem that affects citizens around About three in four poor people live in rural Pthe world. About 1.1 billion people earn less that one dollar per areas, where they depend on natural resources day, and they face daily risks and for their livelihoods. hardships that determine their very survival. The development community, including government agencies, these resources can serve as the basis Section V: Markets and Trade looks banks, and nongovernmental organi- for effective poverty reduction strate- at both the positive and negative im- zations (NGOs), seeks to improve the gies. The report also examines the pacts that trading and market struc- livelihoods of impoverished citizens relationships among resource man- tures can have on poor populations. through poverty reduction strategies agement—or mismanagement—and that address the root causes of pov- Section VI: Marginal Lands and global trade, human migrations, and erty and its crippling effect on people Migration describes the disadvan- regional conflicts. trapped in adverse situations. But tages faced by rural poor populations after years of implementing programs The report is organized around the who live in less-favored areas (LFAs); to solve these issues, poverty remains following topics: strategies these populations use to a multi-dimensional problem with cope with their circumstances; and Section II: Natural Resources and many faces. how appropriate investments in these the Poor discusses the causes and areas can be an important poverty Issues in Poverty Reduction and Natu- drivers of poverty as they relate to reduction tool. ral Resource Management defines the natural resources, and examines the links between poverty reduction and complex relationship between poor Section VII: Corruption and natural resources. About three in four populations in developing countries Conflict examines the impacts of poor people live in rural areas, where and natural resources management. corruption in the private and public they depend on natural resources for sectors on the rural poor, and how Section III: Governance and Social their livelihoods, and about 90 per- competition over natural resources Dimensions explores the impacts cent of them depend on forests for at can fuel or sustain both low-level and that effective—and ineffective—gov- least some part of their income. This violent conflicts. It also reviews the ernance, institutions, and legal and report explores the connection be- opportunities to incorporate envi- social processes have on poverty tween poverty reduction and natural ronmental considerations into peace- reduction. resources management (NRM)—it making efforts. describes how the world’s poorest cit- Section IV: Risk, Vulnerability, Section VIII: Distribution of izens depend on forests, fisheries, wa- and Poverty Traps analyzes the dif- Environmental Costs and Benefits ter, land, and other natural resources ferences between the transitory poor analyzes the effects that the equitable for their livelihoods; examines the and the chronically poor, and strate- or inequitable distribution of envi- governance, economic, and social gies that may help these two popula- ronmental costs and benefits has on factors that determine this vital rela- tions recover from poverty or reduce tionship; and shows how wise use of their vulnerability to setbacks.

issues in Poverty reduction and natural resource Management 1 poor populations, and its implica- The report’s eight sections corre- tions for poverty reduction efforts. spond to the topics delivered at the seminar series. These sections sum- Section IX: Conclusion synthesizes marize and synthesize concepts, find- the report’s recommendations for us- ings, and recommendations provided ing NRM policies and processes to by the seminar speakers and gathered reduce poverty. from important literature in the To highlight examples of these cross- poverty reduction field. Rather than cutting themes and issues, this report documenting each reference, the represents the following three case port provides a reading list at the end studies: of each section to provide interested readers links to the most important Guatemala Forestry Concessions. sources. More detailed presentations, Small-scale timber and forest product speaker sketches, reading lists, and operations take advantage of emerg- other resources can be viewed at: ing markets or certification schemes www.nric.net. that add market value. This report is aimed at profession- Bangladesh Fisheries Management. als working in programs related to Community fishery management poverty reduction, economic growth, organizations secure access to the and NRM and conservation. USAID resource and focus on implementing hopes it will improve understanding best practices. of the links among these disciplines Namibia Wildlife Conservancies. and enable decision makers and Community wildlife conservancies program managers to integrate these generate revenue for local communi- relationships into programs and ties from wildlife management and strategies in their departments and conservation programs. agencies. n Suggested readings and references relevant to each section are presented at the end of those sections, as well as in Appendix A.

Issues in Poverty Reduction and Natural Resources Management was prepared by the Natural Resources Information Clearinghouse (NRIC) for the U.S. Agency for International Development’s (USAID) Natural Resources Management and Poverty Reduction Offices. The report draws on material presented at a USAID/ NRM- and USAID/PR/PASSN- sponsored seminar series devoted to these topics, presented between October 2004 and March 2005 at USAID in Washington, DC.

Section I: Introduction Section II: Natural Resources and the Poor

atural resources play a special role in the life of the More than 1.3 billion people depend on fisheries, poor. More than 1.3 billion N forests, and agriculture for employment—close to people depend on fisheries, forests, and agriculture for employment— half of all jobs worldwide. — FAO 2004 close to half of all jobs worldwide. Ac- cording to the World Bank, in 2002, 90 percent of the world’s 1.1 billion policies. These include the United comes. Rural communities are often poor—those living on less than $1 Nations (UN) Millennium Develop- bound together by professions based per day—depended on forests for ment Goals (MDGs) and the World on harvest or exploitation of natural at least some part of their income. Bank Poverty Reduction Strategy systems. From shared use comes a In 2002, international development Papers (PRSPs). Yet these approaches community “sense of place,” spiri- agencies estimated that more than may not fully account for the links tual and aesthetic values, and health 90 percent of the 15 million people between resource management and benefits related to a clean, healthy, working on the world’s waters were poverty reduction, and subsequently functioning ecosystem. For the rural small-scale fishers, most of them poor, fail to realize the full potential of poor, natural resources foster cohe- not including the tens of millions of natural resources (goods and services) sion and strengthen the safety net for poor who fish inland rivers, lakes, and as wealth-generating assets for the the whole community. even rice paddies for protein. poor. This section characterizes the In general, the poor have limited ac- While all human societies are linked dependence of the poor on natural cess to physical and financial capital. to ecological processes and healthy resources and reviews NRM-poverty In addition, rich and poor people use ecosystems that produce the require- linkages in the policies of leading de- natural resources in different ways. ments for life, rural poor people velopment agencies. The rich often derive more environ- depend significantly more on natural mental income, in absolute terms, capital than do other parts of the from natural resources than the poor, population. In Africa, more than Environmental Values but the poor derive a higher percent- seven in ten poor people live in ru- and Income age of their income from natural ral regions, with most engaged in Natural ecosystems have several char- resources. Several studies show that resource-dependent activities such acteristics that make them attractive small-scale activities in the forest, as small-scale farming, livestock pro- and accessible as a source of income fishing, agriculture, livestock, and duction, fishing, hunting, artisanal to the rural poor. Environmental mining sectors can contribute 15 to mining, and logging. Poor people resources are renewable, widely dis- 70 percent of rural household cash rely on related harvests as a primary persed, and often found in common incomes and even greater values for source of income and fall back on property areas where the poor can ac- subsistence. Because they have greater natural resources when other sources cess them without owning the land. political power, the rich are able to of income fail. Ecosystem goods and services can act as community assets, whose benefits exercise stronger control over access The development agenda is being reach beyond household cash in- to resources. Without wage incomes driven by a few key approaches and and lacking cash, the rural poor often

Issues in Poverty Reduction and Natural Resource Management Figure 1: Nature, Wealth, and Power—Definitions and Links

NATURE Resources—land, water, forests, wildlife—are dynamic, socially embedded, economic, and political. Human institutions define resources and their use.

POWER WEALTH Environmental governance is the distribution, exercise, Natural capital serves as the basis for rural production and and accountability of power and authority over nature. economic systems. In many economies, it is the single most For many rural populations, the major governance issue important economic asset in the country. Investments in is access to and control over resources. natural capital have a high rate of return at the national level.

SOURCE: Nature, Wealth, and Power, USAID. 2002. have no other choice than to depend ity to accumulate wealth from these proposes strategies to reduce the risks on “common pool resources” for food, resources may lead to overexploita- and vulnerability facing poor house- firewood, and medicines. With lower tion and environmental degradation. holds, and to enhance their ability to vulnerability to risk, the rich can se- This “downward spiral thesis” relates participate in and benefit from new lectively concentrate on one or two population growth and economic economic opportunities by focusing activities, such as grazing and agricul- marginalization to worsening en- on their assets. ture, to optimize their investments, vironmental quality and declining while the poor often diversify their resources, resulting in long-term de- livelihood strategies to include a wider clines in food consumption, human Forestry and range of activities, such as collecting health, and food security. This view Livelihoods wild foods, wood carving, and collect- assumes that poverty leads to cycles ing firewood and construction materi- of further environmental degradation Forests contribute to people’s livelihoods in a variety of ways, als partly as a risk mitigation strategy. and ever-increasing poverty. including: Others view population growth as Capital assets. Flexible, multi- Poverty and Natural a source of economic expansion output assets that can be con- Resources Interactions and innovation that leads to greater verted into financial, physical, wealth and better resources manage- human, and more valuable natural There are several views of the inter- capital action between poverty and natural ment. Research findings describe a resources management. Some view great deal of variability in the causes Subsistence safety nets. For- growing populations as adversely of environmental degradation, rang- est foods to meet dietary shortfalls; fodder for livestock; and affecting finite natural resources, ing from adverse or catastrophic natural events to corrupt local insti- construction materials, house- with technology mitigating the type hold goods, fuel, and medicine and degree of impact. In this con- tutions. Evidence from the field also text, poverty is sometimes seen as reports a wide range of environmen- Sources of employment. For- estry, wood industries, furniture, a source or “driver” of biodiversity tal and social outcomes where the poor exercise management control. and pulp and paper; small-scale loss and environmental degradation. forest products processing Conservationists and government Variability in poverty-environment officials often see the poor as part of interactions contributed to the devel- Cash income. Non-timber forest products; timber and small- the natural resources problem and as opment of the asset-based approach to poverty reduction. This approach diameter wood products; and the cause of deforestation, degraded ecosystem services defines poverty as a multidimensional landscapes, and dwindling wildlife SOURCE: Scherr, White, and Kaimowitz (2004) populations. A poor person’s inabil- phenomenon in time and space and

Section II: Natural Resources and the Poor The poor are most affected by environmental degradation. Findings Types of Assets/Capital from the recently completed Millen- Financial assets. Cash, savings, de- tation systems. Housing and jewelry nium Ecosystem Assessment in 2005 posits, and other “paper” assets that are other forms of physical capital confirm that the burden of environ- people use to make purchases and important to many poor households. mental decline already falls heaviest to accumulate liquid wealth. on the poor and that further degra- Social capital. Social resources Human capital. Skills, knowledge, such as kinship systems and commu- dation will increase the numbers of and health status of household nity organizations that people draw poor people. People living in poverty members that enable them to pur- upon in their livelihood strategies. have little cushion or security against sue livelihood objectives. Human Social capital is based on trust, reci- external shocks; therefore, hurricanes, capital is required to make use of procity, and networks, and includes earthquakes, famines, tsunamis, and the other five asset categories. cultural values that link individu- floods as well as macroeconomic cri- als to a long heritage of collective Natural capital. Natural re- choices and sets the context for all ses and mismanagement affect poor sources—both renewable and non- the other interactions. Social capital people most. Such a pattern could renewable—such as land, forests, can have dramatic influences on lead to migrations or even greater water, air quality, and biodiversity. other forms of capital and incomes. unsustainable exploitation resulting Natural capital includes both public and private goods and is central to Political capital. The power rela- in overfishing, soil depletion, de- the livelihoods of many poor rural tionships that control poor people’s sertification, deforestation, or species households that depend on a natu- access to assets. The exercise of extinction, potentially perpetuating ral resource base. Resources are dy- political capital shapes institutions a poverty-environmental degradation namic, changing greatly in value over and defines the formal and informal cycle (see Section VI). time and woven within the social rules or norms of a society. Political fabric of a community. capital is the most valuable in unequal societies where the voices Physical capital. Tools and equip- The Asset-Based of the poor are rarely heard. As a ment owned by households and newly defined category to describe Approach businesses, as well as infrastructure poverty, the concept of political Poverty involves more than money such as roads, power, communica- capital continues to evolve. and income. It is a complicated and tions networks, and water and sani- multifaceted deprivation that affects individuals’ different capabilities and their overall well-being. Access to The poor themselves often take a and vulnerability and to achieve sus- land, education, health, justice, fam- broad view of poverty that not only tainable long-term improvements in ily and community support, credit, includes income, consumption, and well-being. The importance of natu- and other productive resources, and physical assets, but also non-tangible ral capital, within the total stock of a voice in institutions, are all impor- social and political assets such as kin- capital available to households, tends tant in developing sustainable liveli- ship systems, a sense of community, to vary inversely with levels of in- hoods. Poverty has been described the ability to participate in decision- come. The poorer the country or the as the deprivation of different types making, and the ability to influence population, the more significant the of “freedoms”—economic, political, factors that affect livelihoods. Poor role natural capital plays in deter- social, and choices that affect liveli- people, like others, may seek to gain mining poverty outcomes. Natural hoods. For example, political free- additional security from crime and resources contribute to livelihoods dom can help secure better resource conflict, representing yet another di- by providing a buffer against tempo- rights regimes, leading to greater mension of poverty reduction. rary dietary and economic shortfalls, serving as sources of cash income wealth and equity. In this context, The asset-based approach to poverty and employment in times of crisis, freedom is both the ends and means reduction focuses on developing the and serving as a readily convertible of development. stock of wealth available to the poor, capital asset. and on their ability to manage risk

Issues in Poverty Reduction and Natural Resource Management The poor, like others, strategically how that growth is distributed, and tions. Spatial poverty traps are related manage their complex asset portfo- how quickly and effectively poverty to isolation, low-production-poten- lios, balancing the feasibility, relative can be reduced. Bad economic policy tial areas, economic marginalization, costs, trade-offs, and expected returns can not only slow growth and pov- and political exclusion. To ensure in considering each option. Power- erty reduction, but also reduce the that the benefits of economic growth ful complements exist across various value of household assets through reach the poor, it is important to ad- assets: investing in education when inflation and shift household liveli- dress the underlying issues of exclu- future returns in wage labor appear hood strategies from wealth creation sion and inequality that often accom- significant; seeking out secure savings to wealth protection. In the asset- pany it. Though economic growth is mechanisms and investing in social based approach, the emphasis is a necessary means for reducing these capital as hedges against future risks; placed on the role of institutions in pockets of poverty, it is not sufficient and using homes to generate revenue influencing the access of poor house- in and of itself (see Section IV). by renting out rooms or running mi- holds to assets, the benefits derived Functioning markets and secure cro and small enterprises. from their assets, and incentives for resource rights are key for poverty developing assets. To meet poverty reduction strategies. Markets provide reduction goals, governance systems choices and represent important so- Causes and Drivers must build effective institutions, re- cial assets for the poor; but they do of Poverty duce corruption, and empower local not work well where property rights Poverty results from multiple fac- communities to manage their own are not clear and enforced. Moreover, tors that work together to create resources. Local people are more a lack of resource rights for local and maintain conditions of poverty. likely to conserve resources if they people diminishes economic oppor- These factors interact over various understand how their choices will tunities available to them. Property scales of time and space, but they increase their resilience to threats rights must not only be clear and en- include issues related to governance, and improve their well-being (see forced but equitably (not necessarily economics, and cultural and human Section III). rights. equally) distributed (see Section III). Economics, Risk, and Poverty As a pathway out of poverty, natural Governance, Social Dimensions, Traps. Economic growth can create resources present opportunities as well and NRM. The link between natural differences in economic prosperity, as challenges. In an apparent paradox, resources management and poverty with some groups benefiting more countries with rich natural resources reduction depends on the systems from increasing wealth and environ- often experience low or negative of governance. Pro-poor growth and mental improvement while others growth rates, particularly those with sustainable resource management will are excluded from these gains. This non-renewable resources such as oil require a fundamental change in gov- kind of skewed income distribution and diamonds. This is known as the ernance. In general, the wisest and often overlooks the poor and leaves “natural resource curse” because it can most equitable decisions about natu- them even more vulnerable to in- lead to conditions that limit growth ral resource use are made openly and creasing poverty and environmental in export revenues. In resource-rich transparently. Those who are most degradation; moreover, the problem countries, high commodity prices affected by these decisions should seems to get worse in future genera- can create conditions that stall local have access to information, be able to tions. Faced with social inequality manufacturing and limit value-added participate in decision-making pro- and left out of the benefits of eco- industries. This can effectively reduce cesses, and have access to recourse. nomic growth, resource-poor often the potential of natural resources as a populations attempt to avoid risk, Effective institutions have long been strategy for local poverty reduction; make only short-term plans, and fail recognized as integral to poverty however, environmentally sustain- to invest in the future. This can cre- reduction. The “rules of the game” able resource-based industries that ate a “poverty trap” in which escape that institutions define can influence leave significant shares of revenue in from poverty is extremely difficult a country’s rate of economic growth, the local community can provide real and could extend to future genera-

Section II: Natural Resources and the Poor Ecosystem and Poverty Reduction Links Some contemporary policies attempt to link ecosystems sectors, then increasingly focused on economic growth and to poverty reduction. Unfortunately, contemporary poverty other aspects of poverty. By 2005, about 70 countries were assessments and poverty reduction strategies often under- expected to have prepared PRSPs, with 39 full PRSPs and 14 estimate rural incomes from natural resources management preliminary versions prepared to date. and undervalue ecosystem services as an asset for the poor. In the past, development often emphasized high-input, ex- Some progress has been made under the PRSP process. It port-driven use of natural resources and government-spon- has led to better analysis and understanding of poverty at sored industrialization. These efforts unfortunately were not a national level, increased government transparency, helped particularly pro-poor. In the case of forestry, large-scale con- create better institutions to serve the poor, and provided cessions and plantations followed a strategy that deprived greater opportunities for civil society input and citizen the poor of access to essential resources and ultimately participation. Critics of the PRSP process identify problems has not contributed to national development goals. Recent related to vague commitments and ambiguous outcomes reviews of the World Bank, International Monetary Fund that do not specifically target poor populations or establish (IMF), and United Nations reveal an ambivalent endorse- provisions to monitor and evaluate results. ment of the value of healthy ecosystems as an asset for An important criticism of PRSPs has been their failure to the poor. Consider recent reviews of the UN Millennium adequately “mainstream” environmental and natural re- Development Goals and the Poverty Reduction Strategy sources management issues into the lives of the poor and to Papers required by the World Bank and IMF in exchange for realize the potential contribution of environmental income debt relief and assistance. to sustainable livelihoods. Although PRSPs emphasize techni- Millennium Development Goals cal issues related to poverty-environment issues, they often The UN 2000 Millennium Declaration is a global agenda of fail to address more controversial issues related to access, eight development goals including MDG 1: Cut world pover- ownership, control, and the rights of poor people related to ty in half by 2015. The innovative approach to achieving this natural resources. An opportunity to use natural capital as infuses accountability by establishing quantified, time-bound an important pro-poor growth area has often been missed. targets and measurable indicators to track progress. MDG The World Resources Institute (WRI) suggests seven steps 7, ensuring environmental sustainability, has three targets to more strongly integrate environmental assets into pov- and eight indicators to link poverty and environment. Some erty reduction efforts: observers criticize the targets as too vague and missing the cross-cutting nature of the environment’s relevance to the • Ecosystem orientation and environmental income. other eight goals, such as eradicating hunger, disease, and Emphasize the ecosystem approach and value ecosystem child mortality, and promoting gender equality and sustain- services as a source of income for the poor. able development. These critics suggest stronger recognition • Sustainability of income over time. Take a long-term of the ecosystem-based and NRM approach as the founda- approach and consider the consequence of developing tion for poverty reduction; moreover, they suggest more agriculture, fishery, and forestry sectors. specific targets to measure ecosystem integrity and capacity • Tenure and access to resources. Recognize the central to provide ecosystem services. In this context, indicators importance of land tenure to reducing rural poverty. should reflect the importance of communal areas and expand the extent and condition of common pool resources. • Decentralization and Community-Based NRM Other indicators should be expanded to monitor land ten- (CBNRM). Devolve power over resource management ure, resource access, and access to information. to competent local authorities and community groups. • Participation, procedural rights, and gender equality. Poverty Reduction Strategy Papers Ground the strategies in broad-based participation by civil Countries seeking debt relief and concessional loans from society. Emphasize free, prior, and informed consent by lo- the World Bank and IMF must prepare a PRSP—a document cal communities in economic development projects. detailing the nation’s strategic approach and plan to reduce poverty. They have emerged as important policy mechanisms • environmental monitoring. Include plans to monitor to help developing countries implement MDGs. Begun in environmental conditions to track impacts of economic 1999, PRSPs introduced a participatory, results-oriented ap- growth on environmental income. proach that allowed countries to decide for themselves how • targets, indicators, and assessments. Specify poverty to shape policies, develop plans, and set budget priorities and environmental indicators to evaluate performance for poverty reduction. Early PRSPs emphasized the social and allow for adaptive management.

Issues in Poverty Reduction and Natural Resource Management benefits and pathways out of poverty Suggested Readings (see Section IV). and References Culture and Human Rights. Efforts Barrett, C. B., T. Reardon, and P. Webb. 2001. “Nonfarm income diversification to map poverty consistently show and household livelihood strategies in that households living in pockets of rural Africa: concepts, dynamics, and poverty or spatial poverty traps are policy implications.” Food Policy. Vol. subject to some form of exclusion 26:315–331. based on factors such as ethnicity, Leisher, Craig, and Joe Peters. 2004. race, language, and customs. As a Direct Benefits to Poor People from result, these people are left out from Biodiversity Conservation. Washington, the benefits of economic growth, D.C.: The Nature Conservancy (TNC). improved market access, and bet- Millennium Ecosystem Assessment (MA). ter governance. One way to ensure 2004. Ecosystems and Human Well-Being: that the benefits of economic growth Synthesis. Washington, D.C.: Island Press. reach the poor is to explore the close U.S. Agency for International interaction among natural resources, Development (USAID) in collaboration economic growth, poverty reduc- with Center for International tion, and governance and rights. For Forestry Research (CIFOR), Winrock example, investments in labor-inten- International, World Resources sive natural resources management Institute (WRI), and International may yield not only high returns on Resources Group (IRG). 2002. Nature, Wealth, and Power. Washington, D.C.: investments, but also provide jobs USAID. and income to society’s poorest people (see Section VI). Migration World Resources Institute (WRI) in resulting from conflicts or natural collaboration with United Nations Development Programme (UNDP), disasters can have positive or negative United Nations Environment impacts on the poor; however, labor Programme (UNEP), and World Bank. migration to higher-wage areas often 2005. World Resources 2005: The Wealth means remittances from domestic of the Poor—Managing Ecosystems to and foreign migrants to home coun- Fight Poverty. Washington, D.C.: WRI. tries and populations. These play an increasingly important role in rural livelihoods (see Section VI). Conflicts usually affect the poor most adversely and create waves of refugees who move into poverty. Corruption steals benefits from the poorest people and leads to losses of assets and freedoms that cripple rural livelihoods (see Sec- tion VII). n

Section II: Natural Resources and the Poor Analytical Tools: Stakeholder Analysis Stakeholder analysis uses a range of tools for assessing • Separate meetings with different categories of stakeholder interests. A program manager conducts stakeholders might be needed to facilitate open a stakeholder analysis to understand whose interests and honest discussion. should be taken into account and why. Such an anal- • Key stakeholders with high influence and impor- ysis is particularly useful when formulating policies or tance are potential partners in project planning program implementation strategies. It can be helpful and implementation. for confirming or broadening a program manager’s perception of stakeholders or for understanding the • Sometimes key representatives of local NGOs are context in which policy changes will be implemented. members of the elite or “patron” class and may have dual agendas. Depending on the amount of time and information available and desired, several different matrices • Information on primary stakeholders should be have been developed and used to conduct stake- available from social analysis. holder analyses. Information collected ranges from a stakeholder’s ability to impact processes necessary for • Confirm that a gender analysis has been used to implementation of a program to levels of interest and identify different types of female stakeholders (at ability to mobilize available resources. both primary and secondary levels). Whatever the focus, the following are recommenda- • Check that the interests of vulnerable groups (es- tions from USAID’s Women in Development Office pecially the poor) have been identified. for conducting a stakeholder analysis: • Assess the likely impact of the project on each • Sometimes the interests of stakeholders are difficult of the interest groups (positive, negative, or to define or are hidden. Note that each stakeholder unknown). may have several interests. • Each stakeholder should have a clear idea of the • The interests of different stakeholders can often be problems that the project is trying to address (at drawn out by holding action planning meetings the design phase) or of the project’s established ob- with local communities during project design to jectives (if the project is underway). better understand the agendas of different groups of stakeholders, to arrive at compromises, and to stave off conflict.

Issues in Poverty Reduction and Natural Resource Management

Section III: Governance and Social Dimensions

overnance refers to the distribution, exercise, and Dimensions of good governance include citizen Glimits of power. Good governance implies the ability and desire participation, transparency, efficiency, to maintain social peace, guarantee equity, accountability, and gender sensitivity. law and order, promote or create conditions necessary for economic growth, assure equity and social jus- mal, written laws enforced by a state, cusses the importance of governance tice, protect rights (civil, political, or traditional communal practices systems and shows the possible links economic, social, and cultural), and based on social networks and infor- between environmental governance ensure a minimum level of social mal agreements based on cultural policies and poverty reduction security. Some additional elements values. Pro-poor governance policies strategies. of good governance include citizen maintain effective institutions, secure participation, transparency, efficiency, land tenure, decentralize power, and equity, accountability, and gender ensure broad citizen access to infor- Institutions sensitivity. Power differs from author- mation, participation, and justice. Effective institutions are essential to ity in that while power is the ability reduce poverty and create sustain- to cause change, authority is limited Corruption refers to the misuse of able livelihood strategies. Institutions to the use of legitimate power. public power for private gain and affect access to assets in a variety of implies a failure of good governance. ways. If land ownership rules are Environmental governance systems It is widely accepted that govern- ambiguous and/or conflicting due link natural resources and poverty by ments that are less corrupt have more to weak property rights institutions, determining ownership, access, deci- efficient bureaucracies and produce households face the possibility of los- sions about use, and control over re- more effective policy. Corruption, ing access to land and resources. In sources that include forests, fisheries, however, is not a synonym for poor this context, they might adopt strate- and land. These “rules of the game” governance and should be distin- gies that emphasize the short term include laws, institutions, political guished from incompetence and (often low-return asset uses), ignor- systems, social networks, cultural inequity. It often has complex, indi- ing longer-term investments that may values, and policies that define use, rect impacts on the poor and natural be more productive but more risky. ownership, and control of key re- resources (see Section VIII). In this way, institutions can affect sources. To address poor governance, further returns on assets and incen- responsible authorities use these rules Good governance ensures the rights tives to accumulate them. Complex to check power and limit authority. of all citizens to access information, government procedures that discour- Good governance leads to improved participate in decisions, and have age the poor from obtaining property efficiency, effectiveness, and equity. speedy recourse to justice. Despite titles limit their ability to make full Prevailing governance systems usually their significant reliance on natural use of this asset (e.g., using it as col- reflect the local culture and people. resources, the poor often have had lateral for a bank loan) and can weak- For example, land tenure rules define relatively little impact on environ- en their commitment to improve land ownership, but they can be for- mental decisions. This section dis-

Issues in Poverty Reduction and Natural Resource Management 11 their natural resource holdings (e.g., person can do with it; i.e., their prop- be ignored or not recognized by gov- adopting soil conservation measures). erty rights. Tenure rights and obliga- ernment laws, often resulting in gross tions usually include: inequalities in land distribution. In The ability of the poor to influence this context, there are two issues rel- their institutional surrounding, or • The right to use the resource (the evant to pro-poor tenure policies: (1) their political capital, is important. In “usufruct” right) or to control how tenure must be secure; and (2) land general terms, the relationship of the it will be used distribution must be equitable. Un- poor to public and private institu- • The right to exclude others from equal access to land and other pro- tions often reflects their position in unauthorized use ductive resources is a defining feature society—one of limited power and • The right to derive income from of persistent poverty. influence. These limitations often the resource result in a series of related problems: Since they rely heavily on natural • The right to sell all or some of resources for their livelihoods, poor • Poor people may have little trust these rights to others, either per- people suffer most from insecure and and low expectations of the insti- manently or for a limited time inequitable tenure laws. The lack of tutions that shape their livelihood through a lease options assets and clear property rights is a • The right to pass these rights down major source of continuing poverty • Public institutions might provide to one’s successors since it does not allow the poor to no or inadequate services to the • Protection from illegal expropria- use their land assets for collateral and poor, and most services go to those tion of the resource credit, thus effectively barring them with greater power and wealth from productive investments at eco- • An obligation not to use the re- • The poor are unable to make the nomics of scale. source in a way that harms others most productive use of their assets, thus remaining unable to improve • An obligation to surrender these Two large-scale trends that result their financial situation rights through lawful action from growing global integration affect resource tenure. First, globaliza- • The poor lack incentives to Tenure can be in the form of formal tion tends to favor private property sustainably manage their own laws or traditional practices and so- and private responsibility, with gov- resources and make informed deci- cial networks that govern ownership ernment assuming a lesser role with sions about resource use and access to resources. This is espe- respect to the private sector and civil • Asset accumulation is difficult cially true for communal resources society. Second, decentralization en- since confiscation or asset strip- that are owned by villages or tribes, courages local, indigenous, and com- ping is a constant threat who often allocate fishing grounds, munity-level institutions to become forests, or grazing lands informally to more assertive in the management selected members of the community. of local resources. These two trends Resource Tenure and Secure tenure enables poor landown- promise to transform the capacity of Property Rights ers to invest in their property and the poor to earn environmental in- Legally, tenure refers to a bundle of optimize its use over a long period. come from natural resources. rights and obligations to own, hold, It allows the poor to transform na- and use resources. It has been defined ture into an economic asset. On the Secure tenure can be defined as the as the “ability to call upon a collec- other hand, insecure land tenure al- certainty that a person’s rights to con- tive to back one’s claim to a benefit lows elite groups or conflict to push tinuous use of land or resources will stream.” This definition emphasizes powerless landowners off the resource be recognized and protected against that there can be several sources of base without recourse or compensa- challenges from individuals and legitimacy for tenure claims. In ad- tion, and is a disincentive to sustain- the state. Tenure reform is distinct dition to ownership, tenure refers to able management measures. In many from land reform in that it does not the rights to use the land and have countries, poor and indigenous peo- redistribute parcels of land per se, access to resources. In other words, ple may be excluded from traditional but rather makes adjustments in the tenure defines property and what a forests and their rights to access may rights to hold and use land. Pro-poor

12 Section III: Governance and Social Dimensions policies can include transforming ments transfer responsibility for into management decisions affecting state-issued permits for specific land resource management without also natural resources. In this context, de- uses into leases that provide more transferring adequate financial re- cision makers are accountable to the protection for users of the land. sources or revenue-collecting author- people. This accountability obligates ity. Without authority to collect taxes representatives to answer for their ac- and revenues, local bodies cannot tions and subjects them to sanction if Decentralization provide services and exercise control, they do not meet public expectations. Decentralization refers to a process and they lose credibility and power. Without accountability, governments by which a central government trans- Moreover, elite groups or corrupt of- have little incentive to improve per- fers some of its powers or functions ficials can dominate local institutions formance, deliver on promises, or to a lower level of government or and manage their resources without even provide basic services. to a local leader or institution. For accountability. Local elites can slant example, local groups can assume the electoral process or create special responsibility to manage a tract of deals with private companies that ex- Information, Participation, forest or an irrigation system, or they clude the poor. In these cases decen- and Justice can create village councils or “conser- tralization can harm the poor in the In 1992, at the Earth Summit in vancies” to manage wildlife and run following ways: Rio de Janeiro, 178 nations adopted commercial ecotourism operations. Principle 10, which committed • No real control. No meaningful de- Decentralized management systems signatories to provide citizens with centralization, but rather retention control the flow of revenues and greater access to information about of central government control. delivery of services at the local level. the environment, opportunities to Advocates of decentralization cite the • Lack of financial resources. Lim- participate in decision-making pro- potential for greater efficiency, equity, ited or no local power to generate cesses affecting the environment, and and accountability when local people revenue. access to redress and remedy (i.e., participate in key decisions over local • Elite dominance. Powerful groups justice) to protect their rights. These resources. The theoretical benefits of control elections, participation, three rights—access to information, decentralization include: and decisions. participation, and justice—are often • Democracy. Decentralization pro- • Inadequate participation. Little or referred to as procedural rights (and motes greater participation in pub- no representation of the poor in the Access Principles), and they help lic decision-making. decentralized bodies. determine the characteristics of good governance. • Efficiency. Decentralization in- • Gender inequality. Imbalance in creases economic and managerial decision-making and participatory Improved access to information al- efficiency. institutions. lows poor households to take advan- • Equity. Decentralization pro- tage of new opportunities, respond to To succeed, decentralization should vides for greater retention and market prices, find out about activi- be based on democratic principles. more democratic distribution of ties with potentially harmful effects In this context, good decentralized benefits. on them (e.g., siting of dams and governance requires a clear line of roads, land use changes), and take • Accountability. Decentralization accountability from decision mak- advantage of government-sponsored brings public decision-making ers to the local population. Most of training and assistance programs. closer to the people. the benefits of decentralization are Access to public information such believed to arise from increased par- Decentralization has in fact had as laws and accounts of government ticipation. Effective local authorities mixed results. Sometimes failed or services and expenses provides ac- should bring local people into the partial decentralizations result from countability tools for the poor to decision-making process and estab- bad choices about institutions and press their claims. Moreover, access lish mechanisms to integrate their their subsequent misuse of authority. to information technologies such as knowledge, needs, and aspirations In some cases where central govern- radio, television, and increasingly, the

Issues in Poverty Reduction and Natural Resource Management 13 Internet, provide platforms for citi- Considerations rules. These officials should provide zen participation. for Planning and demand-driven services based on participatory, democratic processes. Participation in decision-making Implementation Qualifying institutions need to re- allows the poor to affect outcomes Empower Citizen Participation. Lack ceive adequate resources and discre- directly related to their livelihoods. of control over available resources tionary authority to set priorities and For example, poor farmers can and and inability to participate in deci- implement development projects; should help shape agricultural re- sion-making processes often limit however, they need to demonstrate search agendas, review poverty reduc- the poor’s their ability to use natural financial competence. Local institution strategies, and help set priorities resources in a sustainable manner to tions should also build in pro-poor for planning and budgeting. Pro- accumulate wealth. policies into resource management poor policies should design participa- Strengthen Land Tenure. Regard- plans. n tory methods and outreach efforts less of the form of tenure, rights to include all stakeholders. These over resources, especially land, are include citizen meetings to review often the most fundamental build- Suggested Readings programs, and community-based ing blocks of prosperity for the poor. and References management committees to review Resource rights reform lies at the Food and Agricultural Organization of government performance, resolve heart of pro-poor policies for those the United Nations (FAO). 2002. Land conflicts, and/or build consensus. dependent on natural resources. By Tenure and Development. Land Tenure Series No. 3. Rome, Italy: FAO. Access to the legal and justice sys- understanding the plural nature of tems enables the poor to secure and tenure systems—formal and informal Reed, David. 2005. Changing the Political enforce their rights to use natural agreements—and the dynamic aspect Economy of Poverty and Ecological Disrup- resources. Poor people often lack of ownership, policy makers can bal- tion. Washington, D.C.: World Wildlife Fund Macroeconomics Program Office. knowledge of land laws, legal institu- ance customary systems with modern tions, and processes to advance their legal definitions. This requires policy Ribot, Jesse C. 2004. Waiting for De- claims. Intimidation by local elites makers to: mocracy: The Politics of Choice in Natural and government officials can further • Create a well-defined system of Resource Decentralization. Washington, D.C.: World Resources Institute (WRI). reduce the poor’s influence. In this recording, transferring, and enforc- context, pro-poor policies can in- ing resource rights clude translations of policies and reg- • Improve weak government insti- ulations into local languages, training tutions that create excessive land in rights, provision of paralegals regulations, legal labyrinths, and and legal advice, simple land tenure complicated registration procedures provisions, and efficient procedural that reduce poor people’s access to processes. Government institutions land titles and resource use should be transparent, fair, and timely in handling land titling and • Translate laws and policies into registration and should provide effec- local languages, and provide rights tive local mechanisms for resolving training and legal advice conflicts. Poor people should be able • Recognize and honor preexisting to participate in fair permitting and local rights over resources licensing procedures and should be Encourage Accountability and able to obtain licenses and registra- Democratic Processes. To implement tions without undue costs or deliber- effective governance, local authori- ate obstruction. ties should be accountable through open and fair elections or other mechanisms, such as civil service

14 Section III: Governance and Social Dimensions Analytical Tools: Early Warning Systems Natural resource degradation, conflict, natural disas- ucts and services available through the early warning ters, and economic crises increase the risk of some system include: people falling below the poverty line. Some man- • Food security updates and briefings providing the made and natural crises come without warning, but latest information on food security threats decision makers can prepare and take preventative ac- • Data dissemination and analysis for remotely tion to deal with those disasters that unfold gradually. sensed and ground-based information Poor people depend on natural resources more than any other group and are therefore more likely to be • Baseline vulnerability assessments using a liveli- negatively affected by natural disasters. Early warn- hoods perspective ing systems can provide information on threats and • Technical assistance to national and regional early provide context for decision makers to take preventa- warning systems in early warning techniques and tive action and plan disaster response. For example, tools, food security and vulnerability assessment USAID’s Famine Early Warning System Network methods, and contingency and response planning (FEWS NET) provides information relevant to pre- paredness and planning to reduce food insecurity. The livelihoods approach employed by FEWS NET Initially focused on Africa, FEWS NET has expanded provides information about how and why people sur- to include countries in Central America, as well as vive difficult times. Products of a livelihoods analysis Haiti and Afghanistan. range from a national livelihood zone map to profiles of livelihood patterns among different wealth groups FEWS NET’s approach to reducing food insecurity in a selected zone. Since the livelihoods analysis pro- involves producing information to predict disasters/ vides information about people’s ability to procure crises, strengthen contingency and response planning, resources necessary to survive a shock, analysts use develop sustainable networks, understand the un- the livelihoods framework as a guide for interpreting derlying causes of food insecurity, identify long-term early warning information. development needs, and develop and disseminate early warning tools and methods. The range of prod- More information can be found at: http://www.fews.net.

Issues in Poverty Reduction and Natural Resource Management 15 Case Study: Guatemala Forestry Concessions

ituated in the Peten region tions; improving forest management, , 2004 , er

ll of northern Guatemala and certification, and environmental Mi covering an area of 1.5 million impact mitigation; processing for- Laura S d hectares, the Maya Biosphere Re- estry products; and strengthening n a serve (MBR) is the country’s largest community enterprises. raser

n F n protected area. Years of conflict and e

l, B l, Community forest concessions a migration into the area from the n

io have made significant contributions t

a overpopulated highlands south of n

er to natural resources management the region have led to high defor- Int and the welfare of the local poor, ics

n estation rates. Additional threats o

m including: e to the natural resources in the © Ch © area include oil concessions, illegal Better forest management. logging, and forest fires stemming Guatemala’s Council on Protected from drought and slash-and-burn Areas Management (CONAP) has agriculture. awarded more than 600,000 hectares in concessions to community In response to these challenges, (approximately 400,000 hectares) A craftsman paints a sign for the Guatemalan government estab- and industry groups to secure ac- marketing the boundary of a lished community forestry conces- community forest concession cess to tenure rights to respon- in Guatemala’s Peten region. sions, beginning in 1994, to encour- sible groups. Ninety-three percent age low-intensity logging and the of these concessions have been sustainable harvest of non-timber certified using Forest Stewardship forest products in the government- Council and World Bank standards. owned forests of the MBR. These concessions have a 25-year renew- Increased revenue from for- able contract and require long-term est enterprises. Since 1990 when management plans for conservation USAID funding to the MBR began, and the sustainable production of community revenues have increased products such as chicle, allspice, and more than 100 percent (see Table xate (a palm whose fronds are used 1). In 2003, forest operations in in flower arrangements). community concessions generated 51,309 person-days of work. Through a series of projects in the MBR, USAID has provided technical New community enterprises. assistance to communities receiv- In addition to forestry activities, ing concessions that focuses on community management plans consolidating community organiza- include strategies to develop non-

16 Section III: Governance and Social Dimensions timber forest products and eco- tABLe i: contriBution of foreSt MAnAgeMent tourism activities, especially around oPerAtionS to incoMe of MeMBerS of coMMunity the Tikal Mayan sites. Smartwood conceSSionS AnD cooPerAtiVeS is working to develop partnerships number of annual Income Per annual Person day of between local communities and pri- community Members Member (us$) labor Per Member vate industries. aFISAP 178 381 36 arbole Verde 344 725 23 Information and markets. Local Bethel 57 855 31 leaders established the Community camilta 88 2,063 63 Forestry Association of the Peten cruce Colorada 65 263 28 (ACOPOF) to increase information custodios 96 2,588 70 flow about forestry markets and el Esfuerzo 41 3,341 162 to promote other species besides laborantes 96 572 61 mahogany and cedrus. A communi- la Colorada 40 146 18 ties-sponsored international buyers’ la Palotada 30 191 9 conference in Guatemala gener- la Pasadita 74 668 16 ated $4 million in deals with global la Tecnica 43 2,422 9 buyers. uaxactun 225 593 22 uMI 172 394 3 1,549 Total 1,140 Average 39 Average

SOURCE: Chemonics International. 2003.

Figure 2: Annual deforestation rates for the peten region of guatemala

Community forestry concessions rst awarded in 1994 2,500

2,000

1,500

1,000 (IN HECTARES) 500 LOSS OF FOREST COVER

1987 1989 1991 1993 1995 1997 1999 2001

YEAR

SOURCE: Chemonics International. 2003.

Issues in Poverty Reduction and Natural Resource Management 17

Section IV: Risk, Vulnerability, and Poverty Traps

ulnerability is a key dimen- sion of poverty. The rich With limited assets, the poor risk falling into Vtend to be much less suscep- tible to risk than the poor, although poverty traps, wherein several generations may some exposures can be similar. Once be locked into poverty. forced below a certain threshold, people recover very slowly and may find themselves in a “poverty trap”: tion can rapidly erode kinship net- a situation wherein poverty contin- Risk and Diversification works and other relationships. This ues for many generations. Consider, Like all people, poor populations results in an important loss of social for example, the adverse impacts on manage their assets to reduce risks, capital and reduced capacity to with- poor populations after Hurricane and will exchange financial, social, stand future shocks. Katrina in 2005. With less access to and human assets to pursue livelihood strategies that limit their health and education, these people The “vulnerability context” defines exposure to risk. Perhaps the most will likely suffer long-term setbacks this environment of external risk. common means of reducing risk is in future income, since the child of It can be characterized by shocks, to diversify livelihoods. By having an uneducated parent is less likely to trends, seasonal cycles, and other dy- alternatives for generating income, receive an education. namic events that define thresholds poor people can shift or borrow assets for poverty and survival. Trends refer Poor people with limited assets are to avoid destitution. Even migration to changes over the medium- to long- more vulnerable than others. They presents a livelihood option: some term. They may be positive or nega- face risks from a number of factors individuals or households may move tive, and may include a wide array of such as drought, disease (especially to places of greater opportunity, and factors such as population growth, HIV/AIDS), tsunamis, conflicts, and might then send money back home. improved governance, and natural other shocks that threaten their liveli- resource degradation. Shocks refer to hoods. Illness or injury can suddenly Generally, however, poor people have sudden, short-term changes that are place an entire family in economic low levels of assets that generate low harmful and that place household jeopardy, and they may have to liq- returns on investments. In many assets and their utilization at risk. Ex- uidate assets to deal with the crisis. cases, they lack of access to insur- amples include natural disasters, con- Regular events such as a harvest ance and credit systems that protect flicts, and economic crises. Seasonali- failure, fluctuations in commodity against shocks and allow them to ty takes into account the dependency prices, and the loss of a job can not rebuild assets. Also, certain groups of many poor households on seasonal only eliminate current household as- may be isolated from networks and fluctuations in prices, employment sets, but also lock several generations kinship systems that provide informal opportunities, and production. The into future poverty. In a broader mechanisms of credit, insurance, and vulnerability context highlights the social context, man-made crises like other buffers against the adverse im- fragility of poor households with lim- conflicts, financial and economic col- pacts of poverty. Diversification and ited resources to respond to shocks lapse, market failure, hyperinflation, other risk minimization strategies are and adverse trends. radical policy shifts, and expropria- normal family choices given the options poor households have available

Issues in Poverty Reduction and Natural Resource Management 19 to them. These strategies, however, Figure 3: herd size thresholds and poverty traps can slow the accumulation of produc- 40 tive assets by poor households and Minimum herd perpetuate their poverty. This occurs YEAR size threshold because many of these risk manage- 30 ment strategies are built upon low- risk, low-return activities. Under these 20 conditions, people may get caught in Poverty trap a poverty trap and their families may stay poor for several generations. 10 PREDICTED HERD SIZE NEXT Poverty Traps 0 Poverty traps refer to conditions or 0 10 20 30 40 circumstances that keep people poor. HERD SIZE THIS YEAR Since these conditions change over The red line indicates the herd-size threshold for escaping the poverty trap. Below the threshold, negative growth from year to year can be expected. Above this threshold, increases in herd size are expected, as indicated by the black curve being above the gray diagonal line. time and space, people face dynamic Source: Lybert, T., et al.’s 2004 study of Ethiopian pastoralists thresholds that determine their poverty status. It is useful to distinguish thresholds to separate them, policy between the transitory poor—those The Example of makers can apply appropriate inter- individuals or households that are Ethiopian Pastoralists ventions for each group. Safety nets temporarily poor and that will move Since a large proportion of poor such as emergency food aid, disaster out of poverty—and the chronic people depend on agro-ecological assistance, or emergency crop insur- poor—those who will remain poor systems, the status and management ance can help the transitory poor over their entire lifetimes and who of natural resources directly affect stay above the poverty line for short will pass poverty on to succeeding poverty dynamics. Most biological periods. These temporary measures generations. At a certain threshold systems that support agriculture, contrast with “cargo nets” that define level of assets, people tend to accumu- livestock, wildlife, fisheries, and for- longer-term policies and structural late even more assets and move out estry activities can be described with changes to lift the chronically poor of poverty; below this asset threshold, non-linear, S-shaped curves that re- out of poverty, and include such strat- other people fall into chronic poverty late resource amounts or status with egies as land reform, microfinance, and face further vulnerability to risks productivity. For example, biological and agricultural subsidy programs. and shocks. systems models often define a mini- In this context, there are two ways to mum population size to determine In technical terms, this critical level get out of poverty. First, poor people maximum sustainable levels of har- of assets represents a poverty thresh- can move above the poverty threshold vest or species renewal. When these old, and wealth dynamics diverge at by accessing microfinance, credit, in- resources, or assets, become depleted this point. Since asset levels change surance, or other programs that pro- below a critical threshold, they pro- over time and space, welfare econo- vide a ladder out of a temporary con- vide diminishing returns on remain- mists define a “dynamic asset poverty dition. Second, programs can shift the ing stocks and ensure poverty traps line” that represents a threshold be- entire poverty threshold downward defined by low asset levels. tween those households expected to through macro policies that establish accumulate wealth and move forward A classic example of rural poverty more favorable terms of trade, secure and those who are caught in the trap traps comes from Ethiopian pastoral- land rights, or create conditions of of persistent poverty. ists who depend on livestock herds greater public welfare. Such polices for their wealth and survival. Several By distinguishing the transitory or enable people to use existing assets to studies tracked herd sizes and human “stochastic” poor from the chronic stay out of poverty over long periods. welfare over cycles of abundance, or “structurally” poor and using

20 Section IV: Risk, Vulnerability, and Poverty Traps drought, starvation, recovery, and out of abject poverty. This kind of agencies can respond in time to se- rebuilding in a semi-arid range land- targeting supports critical thresholds cure prompt payouts. Early warning scape. Research findings show that for assets that appear to be the most systems, such as FEWS NET (see herd size, and subsequent human important to maintain the capacity Analytical Tools: Early Warning Sys- welfare, usually settle on two equi- to recover. Typical policy options tems), use triggers to help forecast librium states: one or few cows; or include childhood immunization, risks and allow agencies to plan and many, but not too many. People with nutritional supplements, child health prepare appropriate interventions. only one cow have minimal assets and programs, keeping children in school, Strengthen Market and Financial no chance to escape their condition. and agricultural support, which can Institutions. Natural resources Those with many cows can rebuild also help the chronically poor. management represents investment their stocks; reduce risk from future Respond Appropriately to choices that relate to incentives, insti- drought; migrate to other areas; save Different Shocks and Trends. The tutions, information, and infrastruc- for education and health care; invest effectiveness of interventions can be ture. These factors can work together in new technologies, or otherwise im- improved by diagnosing the kind to reduce risk and vulnerability and prove their livelihood strategies. of shock or trend that occurred and keep more people from falling into applying remedies to match the prob- long-term poverty traps. Effective Considerations lem. For example, shocks can be rap- policies can maintain high productiv- for Planning and id or slow-onset; they can adversely ities of natural resources and ensure a Implementation impact selected individuals or whole high return on these assets to lower- groups or regions. When individual income groups. Effective economic Target Interventions to the households experience a shock, in- policies can increase the productivity Chronically Poor. Support agencies formal transfers and social support of assets by ensuring access to func- typically target aid to the poorest systems often provide important sup- tioning markets and investing in ap- members of a population for income port, but social exclusion may leave propriate technologies. To strengthen support and related interventions. holes in the social safety net. Public pro-poor financial institutions, ex- This helps those beneath the poverty employment and conditional cash clusionary mechanisms that prevent threshold move closer or beyond it. transfer schemes also offer valuable poor people from gaining access to Optimal interventions depend on supplements to social safety nets. credit, land rights, insurance, and the cost-effectiveness of alternatives Access to credit and insurance repre- social networks must be identified to stimulate self-reinforcing asset ac- sents the real key to individual house- and removed. n cumulation and productivity growth hold risk management. With access among recipients. Sample policy op- to credit, households can access funds tions include cash payments, food needed to rebuild lost assets, recover, Suggested Readings distribution, free schooling for chil- and move onto a natural growth tra- and References dren, and access to land. jectory. Policy makers should provide Barrett, Christopher B. 2005. “Rural Target Interventions to the programs in microfinance, credit, poverty dynamics: development policy Transitory Poor. In addition to tar- insurance, and financial institution implications.” Agricultural Economics. geting the most poor, policy makers capacity-building. Volume 32(1):45–60. can support those people close to Carter, M. and C. B. Barrett. 2004. The Anticipate Crisis. In large-scale the poverty threshold. Such target- Economics of Poverty Traps and Persistent shocks or long-term trends, large ing provides a safety net to non-poor Poverty: An Asset-Based Approach. groups of people face crisis condi- who need short-term help to get back Madison, WI: BASIS Collaborative tions. In these cases, affected popula- Research Support Program. on their feet. By preventing non-poor tions often depend on an inflow of from slipping into a poverty trap, Lybert, Travis, et al. 2004. “Stochastic resources from outside donors. For targeted interventions can be cost-ef- Wealth Dynamics and Risk Management slow-onset shocks such as droughts, fective when compared to other pro- Among Poor Populations.” Economic commercial insurance products may Journal, 114 (p. 498): 750–777. grams designed to lift chronic poor be useful if NGOs and multilateral

Issues in Poverty Reduction and Natural Resource Management 21 sectIonv: MarKets and trade

ffective, functioning markets represent an important asset effective markets allow the poor to turn their Efor the poor. Markets provide the mechanism to turn natural natural resource assets into income. capital into financial assets and create choices that enable people to with- stand shocks and limit vulnerability in assuming that trade openness Greater trade may adversely impact in times of change or crisis. For ex- benefits the poor. For example, some the different dimensions of well-be- ample, rural markets allow collectors countries benefit from regional geog- ing. Trade liberalization creates a of nuts, berries, medicinal plants, raphies with better market access, yet series of impacts that move through and other non-timber forest prod- domestic policies may have growth a network of interconnected links. ucts to exchange these natural assets characteristics that confuse the direct Referred to as an “impact pathway,” into cash and savings. And effective impacts of trade. this chain of causes and effects may markets allow rural pastoralists to sell have direct and indirect consequences their herds at fair prices and avoid for the poor. Freer trade may raise the consequences of livestock loss due impact of trade prices and exclude the poor from pre- to impending drought conditions. on the Poor viously affordable goods and services. Open financial markets and access to Trade liberalization can help the Foreign trade also can limit a govern- credit and insurance enable poor peo- poor, but it can also hurt them. It can ment’s willingness to regulate in the ple to make optimal investments that lead to growth and increased incomes public interest if foreign investment cushion shocks and ensure long-term and may also result in better access interests compete with local needs. asset accumulation. Effective markets to clean water, health care, commu- In the context of natural resources, provide the engine to distribute the nications, and transportation. Some trade liberalization without strong benefits of growth resulting from in- trade agreements are linked to im- environmental management and ternational trade. provements in infrastructure or social enforcement may result in resource Along with functioning markets, reforms that may indirectly help poor degradation and subsequent adverse global trade holds great promise for populations. However, trade liberal- impacts on poor people who depend the growth of rural wealth. Recent ization and economic growth do not on forests, fisheries, and other natural studies link trade with increased necessarily lead to poverty reduction resources for their livelihoods. Thus, growth and poverty reduction. Data or environmental stability. While these impacts may aggravate income from developing countries with large increased aggregate incomes may inequality and can even further skew increases in trade show a correspond- reduce the absolute numbers of poor, income distribution in a country. ing increase in gross domestic prod- the percentage of poor might remain stable or even increase. The poor of- Reforms taking into account dif- uct without increasing the inequality ferentiated need should tailor the of wealth distribution. Moreover, ten suffer most in transitions to open markets in the absence of appropriate rights and obligations of developing most of these countries have recorded countries to meet the needs of both fewer people living in poverty. How- government programs and policies, and strong institutions. their citizens and international trad- ever, several factors suggest caution ing partners. To achieve these goals,

issues in Poverty reduction and natural resource Management 23 developing countries should embrace • Local-level Monopolies and many successful business models cur- globalization on their own terms Collusion. The lack of competition rently integrate local communities, and maintain an independent policy among both buyers and sellers may sustainable resources, and markets space to meet their specific needs. distort prices and limit market ac- for forest products (see Case Study: Simultaneously, the international cess to selected groups and elite Guatemala Forestry Concessions in architecture and processes need to be traders. Section III). Global, highly dynamic reviewed. • Lack of Clear Property Rights. Am- markets provide both barriers and biguous ownership rules can pre- opportunities for local communities, and success depends not only Problems of vent trading and create undue risk for buyers and sellers. on appropriate products delivered to Market failure selected markets, but also on orga- • Weak Local Organizations. Lack While growth is necessary to reduce nized user groups, secure land tenure, of strong local organizations may poverty, it is not sufficient. To evenly adequate business skills, and other limit the ability of individual sell- distribute growing wealth resulting factors to keep revenues in the local ers to achieve economies of scale. from greater trade, developing coun- community. tries need to establish and maintain • Downward Push of Risk to Lower effective domestic markets. Policies Levels. Buyers can distort or close Increased community ownership and programs that address market local markets when large-scale and control of forest resources en- failures can help rural populations changes or crises create risks at re- able low-income producers to secure compete in regional and international gional or international levels. competitive advantages in certain markets and open up new opportu- markets. To capture the value of • Pricing and Tax Policies. Govern- nities resulting from certification, natural resources, the poor require ef- ment subsidies, taxes, fees, or payment for environmental services ficient and well-functioning (perfect) licenses can distort fair market (PESs), and other changing market local markets. Unfortunately, small, prices and open participation. isolated, low-volume, and low-quality forces. Current studies define signifi- rural markets can often fail or work To make markets work for the poor, cant income potential for selected against the rural poor. Important fac- government policies must address market niches for commodity wood, tors of market failure include: and overcome these problems. high-value timber, certified wood, processed wood products, industrial • Lack of Information. Rural popu- pulpwood, non-timber forest prod- lations often have limited or no Forests for the Poor ucts, and payments to protect valu- knowledge about international The forestry sector provides a good able ecosystem services. prices and allow outside traders to example of trade impacts, since for- reap large profits outside the com- est products can play an important To tap rapidly changing global for- munity. This is referred to as “asym- role for the rural poor. More than 90 est markets, rural communities must metrical market information.” percent of poor people depend fully compete against large industrial • Market Segmentation and or in part on forest products for their suppliers with vertically integrated Exclusion. Some rural markets are livelihoods. Yet the dominant models commodity chains and easy access to open only to selected groups or of forest management are based on markets. Such factors keep prices low special interests. large-scale logging in commercial for most commodities and squeeze profit margins for independent, rural • Barriers to Market Entry. forest concessions, industrial forest producers. However, local communi- Bureaucratic requirements or elite plantations, and public protected ar- ties can compete in global markets groups may limit market participa- eas that deprive poor peoples of forest with business models developed for tion based on the size or capital lands and related livelihoods. specific products, markets, and local of traders or may require complex Changes in forest resources, mar- conditions that identify comparative licenses, fees, or even bribes to par- kets, and governance systems hold advantages in the marketplace. For ticipate in market trades. promise for alleviating poverty, and example, local producers can develop

24 sectIon v: Markets and trade production systems and pro-poor commodity chains for selected prod- Environmental Services ucts based on community knowledge Environmental services refer to the Effects on environmental of the forest. Local business leaders human benefits provided by healthy service (ES) sellers. How does can choose from among several suc- and functioning ecosystems. These the PES affect poor household cessful business models best suited include carbon sequestration from livelihoods? for keeping revenues in the local intact forests, biodiversity from Effects on non-sellers. How do community. These may include: (1) pristine areas, water quality from PESs affect people who do not par- community management of their healthy watersheds, and landscape beauty from diverse public and pri- ticipate in or sell ESs? own forests; (2) access and right to vate lands. As an evolving resource use public forests; and (3) private, Various conditions determine how management strategy, PESs enables PES impacts the poor, including scale small-scale agro-forestry plantations a donor, NGO, or other buyer to of the project, associated transac- to grow trees. (For an example of purchase these services from local tion costs, and how land use chang- community-based forestry conces- communities or other sellers. PES es result in lost opportunities and sions, see Case Study: Guatemala is a conditional, voluntary sale of livelihoods. Recent studies present an environmental service. The envi- Forestry Concessions in Section III.) some general conclusions: ronmental service is often a change in land use, such as not harvesting Net gains for ES sellers. Gains trees, and payment is conditional include non-income benefits, Considerations on specific restrictions. Common particularly for moderately poor for Planning and examples include conservation households. Implementation concessions, easements, protected catchments, or forest-carbon se- Participation obstacles. Some ac- Strengthened institutions and gov- questration plantations. Others are cess rules and structural constraints ernance frameworks in developing product-based schemes where con- hamper participation by the poor, countries and internationally can sumers pay a “green premium” on while others are in their favor. help to assure benefits and mitigate top of the market price for a certi- Mixed results. PES has mixed ef- negative impacts on low-income fied production process. fects on impoverished non-sellers, groups. Some considerations for While PES mechanisms grow in im- but landless poor engaged in envi- developing effective pro-poor trade portance, policy makers should con- ronmentally degrading activity could policies include: sider several factors to determine lose out significantly. their impact on the poor. Scale issues. Small-scale PES ap- Tighten the Value Chain. To keep plications may leave out the poor, revenues in the local community, Participation. Do the poor have access to market share in PES especially if they do not own land. commodity value chains should schemes? include reliable, honest local buyers who pay fair market prices for local products. Market analysts can knowledge and improved negotiating for meeting the growing demands of evaluate NRM commodity chains to positions. Organized groups of small private and government standards assess inefficiencies and inequalities. business persons can create econo- and certification schemes. Government polices can help estab- mies of scale related to input supply lish fair commissions for traders and Catalyze Better Governance. Gov- and output marketing middlemen. ernments and NGOs can promote Develop Greater Skills and Knowl- reforms to ensure more profitable Build Strong Local Organizations. edge. To compete globally, local com- market participation by low-income Trade associations, producer and munities will require training, capac- people. The most important policy community groups, and effective ity-building, and/or partnerships that actions include: (1) securing resource partnerships with businesses, NGOs, provide or share management, mar- and use rights; (2) minimizing regu- and government groups can give keting, and technical skills, especially latory burdens; (3) leveling the play- low-income producers greater market

Issues in Poverty Reduction and Natural Resource Management 25 ing field by reducing subsidies and providing easy access for all market participants; (4) ensuring active in- volvement of local producers in forest governance and policy negotiation; and (5) correcting the problems of market failure. Conduct Market Analysis. Due to the complex effects of markets and trade on poverty reduction, NRM programs should analyze specific market conditions and gain an understanding how market dynamics affect poor populations and natural capital. n

Suggested Readings and References Cosbey, Aaron. 2004a. A Capabilities Approach to Trade and Sustainable Development: Using Sen’s Conception of Development to Re-examine the Debates. Winnipeg, Canada: International Institute for Sustainable Development. Cosbey, Aaron. 2004b. Lessons Learned on Trade and Sustainable Development. Winnipeg, Canada: International Institute for Sustainable Development. Dollar, David, and Aart Kraay. 2001. “Trade, Growth, and Poverty.” Finance and Development. Volume 38 (3). Scherr, Sara J., Andy White, and David Kaimowitz. 2003. A New Agenda for Forest Conservation and Poverty Reduction: Making Markets Work for Low-Income Producers. Washington, D.C.: Forest Trends, CIFOR, and IUCN.

26 Section V: Markets and Trade SECTION VI: MARGINAL LANDS AND MIGRATION

bout one billion people— approximately two-thirds of Approximately two-thirds of the global rural A the global rural population— live in marginal and LFAs. They face population live in less favored areas. By 2020, if conditions of low agricultural produc- current conditions persist, more than 800 million tivity, poverty, and natural resource people will live in LFAs. degradation. In many cases these areas are geographically isolated, weakly integrated into markets, and politically marginalized. These circumstances Less-favored areas exist in many through lower food prices and migra- can give rise to conflict, emigration, countries, even in developed nations tion to favored areas, and environ- disease, and related problems for such as the United States. At a larger mental degradation rates would slow the poor. Despite development and scale, LFAs include: as migrations reduced pressure on investment programs in more produc- • Semi-arid and arid tropics of Asia fragile resources in LFAs. Public in- tive, or favored, regions, populations and Africa vestment programs still tend to favor continue to grow in LFAs, often under more productive areas with favorable • Mountain areas of Asia, Latin conditions of increasing poverty and credit programs, pricing policies, and America, and Africa increasing environmental pressure. agricultural services, including exten- • Hillside areas in Central America sion and research. As a result, people Marginal lands and LFAs are char- and Asia living in LFAs are often neglected acterized by having low agricultural • Forest margins of humid and sub- and invisible to policy makers and productivity and limited access to humid tropics of Africa, Latin may be overlooked for infrastructure infrastructure and markets. Low America, and Asia development, education and training, agricultural productivity can be due and agricultural research programs. to limited rainfall, poor soils, steep Agricultural development programs, slopes, or other biophysical con- such as the Green Revolution, largely Poor environmental conditions, cou- straints. These areas are also often bypassed LFAs in favor of higher- pled with low investment levels, can considered fragile—less resilient to productivity areas or “high-potential” create a downward spiral of resource human activities and more prone to areas characterized by adequate water, degradation, poverty, and migration. desertification in dry areas, erosion good soil, often high population These conditions can create spatial from mountains and hillsides, and densities, political importance, and poverty traps that concentrate poor other forms of degradation. A remote access to markets. It was assumed people in certain places and prevent location and socioeconomic factors that investments in these areas would them from escaping their condition. also define an LFA, and these regions be more effective and efficient and often lack roads, irrigation, and com- that benefits from such processes of munication infrastructure. They have increased food production, greater Investments and limited access to markets and lack incomes, more foreign exchange, and Institutions effective institutions and governance larger returns on investments would Recent studies show that investment mechanisms. eventually spread to the rural poor in marginal lands may provide sig-

Issues in Poverty Reduction and Natural Resource Management 27 TABLE 2: RETURNS ON INVESTMENTS IN CHINA—IMPACTS ON Improved agricultural techniques POVERTY REDUCTION (PERSONS/10,000 YUAN INVESTED) such as the use of fertilizers can Investment Coastal Central Western improve productivity in LFAs. But research and Development 3.72 12.96 24.03 farmers may be unwilling to apply Irrigation 1.08 2.16 5.02 these techniques due to climate vari- roads 2.68 8.38 10.03 ability, weak tenure systems, and education 5.03 13.90 18.93 unstable prices. To encourage farmers electricity .04 5.71 7.78 to apply the latest techniques, public telephone 1.99 8.10 13.94 investments can help improve infra-

Source: Pender, J. 2005. structure, build effective markets, and provide training. nificant returns to local communi- production environments and found ties and serve as long-term drivers that many types of investments in Differentiated of rural development. Investment in low-potential rain-fed areas yielded Policies Based on marginal lands may produce larger the highest returns. These impacts Rural Diversity impacts on poverty reduction and vary across various land use types and Earlier rural development efforts such environmental protection than in regions. Access to markets greatly as the Green Revolution succeeded in high-potential areas partly because of improves the economic value of mar- the context of relative homogeneity the higher percentage of poor people ginal lands and road construction is among households and communities there and the greater susceptibility to often a key intervention. New road with access to appropriate goods and degradation. Further, it now appears construction in China, for example, services. This homogeneity facilitated that economic returns on investments produced greater rates of return to the rapid adoption and spread of may be even higher in LFAs than LFAs in Western China compared modern agricultural techniques; how- in high-potential areas. Although to more developed coastal areas (see ever, LFAs are often characterized by past investments have been biased Table 2). diversity among rural households and toward more productive areas, public heterogeneity among communities. In addition to poor infrastructure, investment in LFAs may generate Rural households in LFAs are char- LFAs often lack effective markets equal or greater returns and larger acterized by a diversity of resources, for goods and services in the rural agricultural growth on the margin; activities, and access to markets. economy. Weak institutions and im- moreover, these investments yield Moreover, rural communities are het- proper regulatory frameworks often a greater social return in terms of erogeneous in terms of assets, wealth, lead to inefficient rural agricultural poverty reduction and environmental and power. Within LFAs, biophysical markets. Weak markets result in high protection. Investments in LFAs have conditions vary among and within transaction costs that restrict special- the potential to achieve sustainable agricultural areas. As a result, various ization, growth, and trade in LFAs. growth at acceptable cost and achieve development pathways will exist at Structural imperfections in rural mar- a substantial reduction in poverty. different scales and optimal develop- kets include high transportation and Empirical studies of investment in ment strategies may take place at other transaction costs, shortage of LFAs in both India and China found different rhythms and paces. These information, absence of capital and public spending on such activities pathways will be determined by fac- insurance markets, and lack of secure as agricultural research and develop- tors underlying local comparative property rights. Few markets cap- ment, road construction, and electri- advantages such as agricultural po- ture the fair price of environmental fication produced significantly higher tential, access to markets and infra- services and externalities. These im- returns than similar investments in structure, and population density. perfections distort prices from their favored areas. socially optimal values and may lead Local conditions need careful assess- Other studies compared investments to further poverty. ment, and differentiated interven- in rain-fed areas versus irrigated tions need to be designed to improve

28 Section VI: Marginal Lands and Migration production systems and reduce Figure 4: Role of remittances in foreign investment risk for each area. Effective policies $200 should exploit comparative advan- $180 Remittances Foreign Direct Investment tages based on agricultural potential, $160 Of cial Flows access, and population density. Care- $140 Capital Market Flows ful analysis can identify the potential $120 and shape of development pathways $100 and lead to geographic targeting for $80 $60 infrastructure and communications $40 investments. Appropriate investments $20 U.S. DOLLARS (IN BILLIONS) U.S. take into account heterogeneous re- $0 source and socioeconomic conditions 1989 1991 1993 1995 1997 1999 2001 2003 and find balances across different YEAR land use types. SOURCE: Ratha, D. 2004.

Multi-Location 2010, estimates show that the num- Migration in the Households and ber of environmental refugees could World Economy and “Environmental” grow to 50 million, with as many as Environment 150 million by 2050. Refugees Migration has a significant impact on People migrate from LFAs for a To illustrate this crisis, in 2002, development and patterns of poverty, number of reasons, including the rains in Kenya displaced more than yet there remains contentious debate search for better economic opportu- 150,000 people, while more than over the positive and negative im- nities and integration into a political 800,000 Chinese were affected by pacts of migration. On the positive mainstream. In addition, resource the country’s most severe drought in side, migration leads to remittances degradation is widely credited as hav- more than a century. Over the past from national or international mi- ing created a large number of “envi- 20 years, floods and other weather-re- grants who send money home from ronmental refugees,” wherein adverse lated disasters were among the factors cities, high-potential areas, or foreign environmental conditions can no that caused about 10 million people countries. On the negative side, mi- longer support household livelihoods. to migrate from Bangladesh to India. grants can cause social, economic, Households may split apart to work Millions of people worldwide, who and environmental hardship in their in several locations; abandon their are uprooted by more gradual envi- new locales. homelands on a semi-permanent or ronmental change, receive little sup- Remittances play an increasingly sig- permanent basis due to drought, soil port and are not recognized as refu- nificant role in the economy of many erosion, desertification, or deforesta- gees, with the associated benefits of developing countries, often more tion; and even be displaced by con- national and international programs. important than official development servation efforts. Estimates for people As an example of gradual environ- assistance (see Figure 4). Studies esti- displaced by environmental degrada- mental changes, in China, the Gobi mate that remittance received by de- tion range from 10 million to 35 mil- desert “expands” more than 4,000 veloping countries exceeded $93 billion people total worldwide. How- square miles per year, threatening lion in 2003, with about two-thirds ever, researchers cannot accurately many villages. In Turkey, soil erosion in unofficial transactions. This source define all of the causes of migration affects 62,000 square miles of farm- of income is second only to foreign due to the complexity of factors and land. Global climate change promises direct investment (approximately the lack of good social data. There to exacerbate the displacement and $133 billion) as a source of external are likely more environmental refu- increase the number of environmen- finance for developing countries. gees than refugees displaced by war tal refugees. and political repression combined. By

Issues in Poverty Reduction and Natural Resource Management 29 Such remittances generate a sig- Such a strategy based on community- markets for environmental services, nificant and steady source of capital driven development requires decen- establishing new land and water al- that can help reduce the poverty of tralization of authority and public location systems, and creating insti- recipients. In the aftermath of the finance. tutional arrangements improve links devastating Hurricane Mitch in to markets. Make Public Investments. Optimal 1999, the government of El Salvador portfolios will be a mix of public Facilitate Remittances and Their asked the U.S. government not for investments in infrastructure and Productive Reinvestment. Transac- additional humanitarian aid but for technology development, access to tion costs such as bank wire transfers extended permission for Salvadoran markets, and growth in off-farm often eat up remittances, and finan- immigrants to stay legally in the employment as major incentives for cial products may not be available lo- United States so that they could send resource intensification. Investments cally. While immediate consumption money home to relatives affected by should be targeted to roads, agricul- is a legitimate use of remittances, it is the storm. tural research, and education and important to create opportunities for Remittances, however, are not with- training. To mitigate market risks, reinvestment. Of particular impor- out their drawbacks. Some migration investment strategies should help re- tance may be reinvestment in natural experts observe that remittances produce and stabilize transport costs, im- resource stewardship. n vide little improvement to developing prove physical security through rural countries because their citizens have law and order, and encourage new marginal success in converting remit- entry to stimulate competition. Suggested Readings tance income into productive capac- and References Strengthen Institutions. Local gov- ity. This lack of investment reflects Fan, Shenggen, and Connie Chan-Kang. ernments, agricultural extension not only poor families’ immediate 2004. “Returns to investment in less- services, and NGOs should work to- consumption needs, which may be favored areas in developing countries: a gether to increase the availability and the first priority of remittance, use synthesis of evidence and implications knowledge of suitable and productive for Africa.” Food Policy. Volume but also the weak local investment technologies, secure tenure and land 29(2004):431–444. climate where the poor reside. rights, provide equal access to lo- Kuyvenhoven, Arie. 2004. “Creating an cal institutions and their programs, enabling environment: policy conditions Considerations support pro-poor macroeconomic for less-favored areas.” Food Policy. for Planning and policies, and enable communities to Volume 29(2004):407–429. Implementation mobilize additional resources to im- Migration Policy Institute. 2005. prove alternative livelihood strategies. Focus on Less-Favored Areas. Do Migration Information Source: Selected Such institutions should also develop Readings on Migration and Development. not overlook LFAs in development systems to manage risks and common Washington, D.C.: Migration Policy programming. Investments in LFAs property. Institute. 115p. can have clear environmental and Pender, J. 2005. Impacts of Investments poverty reduction benefits, and in Consider Innovative Policy and Livelihood Strategies in Less Favored some cases the economic returns can Options. To support pro-poor sus- Areas: Evidence from Asia, East Africa, equal or be higher than those earned tainable development, programs and Central America. Presentation for in high-potential areas. should allow communities to choose USAID Poverty Reduction and Natural from a menu of incentives based on Resources Management Seminar Series. Recognize the Differentiated specific opportunities. These incen- Nature of Rural Livelihoods. Iden- Ruben, Ruerd, and John Pender. 2004. tives could include well-known ac- tify the most-limiting resource con- “Rural diversity and heterogeneity tivities such as emergency food aid, in less-favoured areas: the quest for straints and market limitations and food for credit, and education and policy targeting.” Food Policy. Volume design a specific, local, and demand- training. Decision makers also may 29(2004):303–320. driven strategy that considers differ- consider novel or more controversial ent co-existing livelihood strategies. instruments such as creating new

30 Section VI: Marginal Lands and Migration Analytical Tools: Knowledge Management Program planning, implementation, monitoring, and Develop monitoring and evaluation at all levels. decision-making are all knowledge intensive and in Monitoring and feedback is essential for good man- many cases, knowledge more than financial resources agement and planning. Monitoring should be of is key to spurring rural development. Knowledge sufficient depth to capture information needed for management is an attempt to support systematic adaptive management and social learning. transfer, exchange, and synthesis of ideas, expertise, Use science as a support tool and to set limits—not and lessons learned through not only the compila- to set objectives. The biophysical sciences are power- tion of facts and best practices but also by bringing ful tools for setting limits and defining possibilities together those with expertise and experience to share in NRM programs. Setting objectives, however, is a information and evaluate its utility. It can be dif- social process. ficult to make such communities work for a variety of reasons: difficulty finding common ground, self- Capitalize on field experience. A wealth of field ex- selecting membership, too narrow or broad a focus. periences exists for development programs. Learning The following are recommendations for improving from what has already happened (both positive and information and knowledge management systems to negative) helps managers and planners build success- support the planning and implementation of NRM ful programs. and poverty reduction programs: Increase transparency and access to resources. Avail- Improve data and information use and support the ability of information is key to sound planning, mon- use of new techniques and linkages to classical and itoring, and management. Access is needed to not local information tools. New information tools such only technical but also economic, legal, and policy as remote sensing, geographic information systems information. (GIS), and decision support tools can be used for better information. These techniques should be carefully Knowledge and information management tools and integrated with classical techniques (inventories and communities in poverty reduction and natural re- ground surveys) and with local monitoring. sources management include: • FRAME: http://www.frameweb.org Develop networks and communities of practice. Communities of practice have proven to be powerful • USAID’s Poverty Frontiers: http://www.poverty- tools for sharing experience, capitalizing on empiri- frontiers.org cal data, building capacity, and lobbying. They are • CBNRM Network: http://www.cbnrm.net particularly useful for bringing out tacit or informal knowledge. Human dynamics and not technology are the most important aspect of sharing and managing knowledge.

Issues in Poverty Reduction and Natural Resource Management 31 Case Study: Bangladesh Fisheries Management

t n the vast wetlands of Bangla- model that included the following rojec

P desh, inland fisheries provide key steps: H AC M IIfood and income for perhaps 70 • Mobilize communities to register million rural households. Here, the

© USAID/ © organizations that are empow- extensive rivers and floodplain wet- ered to conserve local wetland lands of the Ganges-Brahmaputra resources delta rank third in global freshwater • establish co-management com- fish production behindC hina and mittees comprising local govern- India. In the 1990s, several projects ment officials and community working with the Department of leaders to oversee wetland re- Fisheries and national NGOs began source management Community members map addressing two negative trends af- resources associated with fecting the wetlands: a decrease in • Help communities develop re- the fish sanctuary that they area due to environmental degra- source management maps and manage. dation in the watershed, and the plans concentration of income among a • undertake habitat restoration handful of leaseholders. activities t

rojec • adopt conservation measures for

P Since 1998, USAID has supported H

AC sustainable harvesting

M sustainable wetland resource management through the Management • Provide training and credit to © USAID/ © of Aquatic Ecosystems through generate alternative income activ- Community Husbandry (MACH) ities to reduce harvest pressure project (MACH translates as “fish” in Bengali). The project helped These community organizations establish 16 community resource have adopted best practices such management organizations that are as: (1) creating 72 fish sanctuaries; registered with the government and (2) adopting harvest restrictions have secured access for 10 years to during fish breeding season; and (3) Two men identify and count implementing habitat restoration fish in a community-managed certain water bodies. wetland. projects to improve fish passage, To assist these organizations in increase water movement, and cre- adopting best practices for wetland ate perennial fish refuges.T hese management, the MACH project community-based efforts and con- followed a community development servation strategies have produced measurable improvements in key indicators:

32 Section VI: Marginal Lands and Migration Increased fish catch and con- Figure 5: fish yield and fish sanctuaries in mach sites sumption. Between 1999 and 400 80 350 70 2004, catch per hectare grew 140 Fish Sanctuaries percent and fish consumption in- 300 Fish Yield 60 creased 52 percent, providing an 250 50

YIELD 200 40 important source of protein to ru- (kg/ha) 150 30 FISH ral communities. 100 20 NUMBER OF SANCTUARIES Improved biodiversity and wa- 50 10 0 0 tershed management. Contour 1999 2000 2001 2002 2003 2004 planting of about 600,000 trees YEAR stabilized river banks to reduce sedimentation, improve soil fertility, Figure 6: Micro-credit support through mach and restore rare local species. $60 4,500 Incremental Income per Year 4,000 Enhanced incomes for wetland $50 Value of Loans Number of borrowers 3,500 resource users. Over the five- $40 3,000 2,500 year period, fishers gained US$4.7 $30 2,000 million due to higher catches, TAKA $20 1,500 NUMBER OF earned an extra US$0.8 million BORROWERS (IN MILLIONS) 1,000 $10 from new enterprises, and raised 500 0 0 daily per capita incomes from US$1 1999 2000 2001 2002 2003 2004 2005 to US$1.34. YEAR These benefits accrued mostly to the poor and to the 85 percent of Figure 7: increases in income in mach sites households involved in the fish- $350 ing sector. By 2005, almost 4,000 $300 Additional Income from IGAs families had increased their annual $250 Additional Value of Fish incomes by 65 percent, and were $200 able to leave the fishery sector for $150 other opportunities. $100 ACTUAL TAKA ACTUAL $50

0 1999 2000 2001 2002 2003 2004 YEAR

SOURCE for Figures 5, 6, and 7: USAID/MACH Field Report. Winrock International.

Issues in Poverty Reduction and Natural Resource Management 33

SECTION VII: CORRUPTION AND CONFLICT

Overview of Corruption Corruption and conflict can lead to the Since natural resources have high, multiple values, they are often the degradation of natural resources that the rural subject of intense competition. Re- poor depend on for their livelihoods. source use is best managed by rules, norms, and laws, but when these practices fail, competition may evolve shape forestry or land use laws to with poorly enforced quotas, conces- into forms of corruption. Corruption its benefit sions given to friends, and bribes can be defined as the misuse of en- driving most harvest, trade, and ex- trusted public power for private gain. • Grand, or high-level, corrup- port operations. In this context, legal It includes stealing, fraud, bribery, tion (for instance, a head of state producers face an unfair advantage kickbacks, favoritism, and patronage. awards a major forest concession and governments lose large amounts A person may defraud others in the to a family member’s firm) of legitimate tax income to corrupt name of an employer or deceive an • Petty corruption (for example, a officials. Often conducted by “hit- employer to profit themselves or oth- forest guard who has a small salary and-run” bandit companies, illegal ers. Bribery may occur to gain access extracts bribes to feed his family) harvests also threaten the livelihoods to scarce resources, such as securing a of local communities and destroy forest concession; receive discretion- Regardless of its cause and magni- natural resources and critical habitats. ary favors, such as avoiding prosecu- tude, corruption may divert money Government corruption contributes tion for a forest offense; or receive from the natural resource sector to to other forms of environmental deg- incidental benefits such as winning a elite groups, thereby depriving gov- radation, and several studies link it to timber transit permit. A corrupt of- ernments and local people of critical drastic declines of forests, elephants, ficial may award a concession to his revenue. and rhinos in Africa. In addition to own firm (self-dealing) or facilitate forestry, this kind of corruption also nepotism and cronyism. Finally, sev- Governance and characterizes other extractive indus- eral different forms of kickbacks may Corruption tries such as minerals, oil, diamonds, result: direct payments to officials; Forests represent enormous natural and gold. excessive gifts and hospitality; and capital and supply legal and illegal payments from subordinates. For these reasons, funding agencies markets around the world. The work to develop and enforce codes There are various ways to categorize World Bank estimates that practices of conduct and strengthen forest and corruption. It is useful to understand like illegal logging cause annual losses wildlife protection law enforcement. who is abusing authority and the of $10 billion to $15 billion in de- In response to this problem, many legality of associated actions. Corrup- veloping countries. Countries such as organizations and countries have tion occurs at several scales, such as: Indonesia, Malaysia, Brazil, and Rus- developed local governance bodies to sia often produce up to half their logs • Lobbying or overarching corrup- monitor forest activity, implemented illegally. In such cases, government tion wherein a corporation may certification and chain-of-custody bribe a government body to re- corruption plays an important role

Issues in Poverty Reduction and Natural Resource Management 35 requirements, and signed interna- reasons, policy makers should seek to Cambodia have financed civil wars tional agreements with NGOs and understand causal mechanisms relat- and military campaigns. Diamonds private companies in wood markets. ing corruption and resource use, and and other minerals have been impli- Several donors, NGOs, and watch- avoid simplistic models that only link cated in conflicts in Liberia, Sierra dog groups such as Transparency poor governance to environmental Leone, and Democratic Republic of International (Integrity Network), degradation. the Congo. Forests have provided ref- International Tropical Timber Or- uge and food for armed groups. In 2005, USAID launched an anti- ganization, Center for International corruption strategy to develop better Conflicts arise due to many factors, Forestry Research (CIFOR), and ways to address both grand corrup- including competition for scarce re- USAID (Congo Basin Initiative) have tion and lower-level, administrative sources, ethnic or religious tensions, developed measures to assess corrup- corruption. In many poor countries, competition over political power, tion in governance. For example, the corruption in the natural resource dissatisfaction or desperation on Extractive Industry Transparency Ini- sector takes on special significance the part of marginalized groups, or tiative attempts to curb corruption in because of the overwhelming impor- deliberate attempts by the state to these sectors by promoting financial tance of these resources as sources subjugate particular groups or extract transparency. The World Bank and of wealth and growth. USAID’s ap- resources where there are competing the Millennium Challenge Corpora- proach focuses on preventing corrup- claims. There are also several links tion also have polices to link good tion and on civil aspects of enforce- between environment and conflict. governance and corruption to wise ment by giving technical assistance to One link focuses on resource scarcity resource use in extractive industry countries to address the causes of cor- as a cause for insecurity and conflict. sectors. ruption and to change behaviors and Migrations, expulsions, economic de- However, these governance measures incentives. For example, in Madagas- cline, and environmental degradation usually track indicators of corruption car, USAID recently supported the often result from decreasing quality at the national level—they fail to ac- new Ministry of Environment’s cam- and quantity of natural resources, count for corruption at other levels paign to clean up logging permits. population growth, and unequal re- across private and public sectors. Re- A coalition comprising the National source access. These factors ultimate- cent studies stress the complexity of Forest Service, the National Forest ly lead to weakened states and further corruption and emphasize that it has Observatory, and several conservation adverse impacts on the poor. Weak- direct and indirect links to environ- organizations surveyed the various ened states see more ethnic conflicts, mental and socioeconomic outcomes. types of permits and canceled any coups d’etat, and situations wherein As a result, corruption does not nec- that were irregular, or that had not elite groups extend control over pro- essarily lead to environmental degra- paid the required fees. This resulted ductive resources and displace poorer dation and does not always have a di- in the revocation of 300 out of 380 communities. rect cause-and-effect connection. For permits. Other conflicts result from environ- example, when public officials extract mental abundance. Markets for for- bribes to facilitate illegal exploitation, ests, diamonds, gold, water, and fish- resource use may actually decline. Environment eries and trade in endangered species Moreover, if political corruption and Conflict represent valuable resources worth favors urban areas and leads to rural- The development community is fighting for. These resources are por- to-urban migration patterns, it may giving increased attention to the re- table, lucrative, and easy to trade on also discourage natural resource ex- lationship between natural resources legal and illegal markets. Studies in- ploitation. On the other hand, coun- and conflict. In many recent con- dicate that countries with high rates tries with good governance scores flicts, valuable or scarce resources, of poverty, low growth, and abundant may allow financial contributions or such as land, timber, or minerals, primary commodities face a dramati- other forms of lobbying to establish have played a role in both causing cally higher risk of conflict than other permissive extraction policies that and sustaining conflict. For example, poor countries. Ironically, resource lead to resource decline. For these illegal timber products in Liberia and

36 Section VII: Corruption and Conflict abundance can be more important areas often cross national boundar- Development programs should stress than ethnic animosities or weak po- ies, they present important topics for the importance of enforcing existing litical systems in causing conflicts. regional and international dialogues laws and avoiding cooperation with about their use and shared access. individuals and institutions unwilling Conflicts also result from economic Moreover, the interdependence of to carry out enforcement mandates. and social transitions from a sub- diverse groups on these resources of- Effective governance systems should sistence to a market economy. In fers strategic venues to foster dialogue encourage fair and transparent law this context, conflict often occurs in and transform tensions and inse- enforcement. remote areas where local communi- curities into peaceful relationships ties resist resource exploitation by Enforce Regulations in the Financial among nations and civil societies large-scale development projects. Sector. Weak financial regulations within and across national boundar- These conflicts can be mitigated by support illegal markets and money ies. Examples include the Peace Parks strengthening local markets and com- laundering schemes. Tighter over- or Transfrontier Conservation Areas munity-based resource management sight, monitoring, and reporting of (TFCAs) in Southern Africa and models. commercial transactions could reduce the jointly managed conservation the profitability of illegal resource Regardless of the various causes, areas on the Peru-Ecuador border. trade. conflict can foster negative livelihood Jointly managed river basins such as strategies that lead to criminal activi- the Okavango in Southern Africa, Promote Sustainable Management. ties such as illegal logging, wildlife the Nile in Eastern Africa, the Indus Certification programs can strength- poaching and smuggling, and large- in Asia, and the Amazon in South en governance, increase transpar- scale overexploitation of forest and America provide other examples that ency, and increase equity among fishery resources. Large-scale violent require transboundary management stakeholders. conflict, sometimes called “develop- strategies. Effective programs in Improve Governance Institutions. ment in reverse,” also has devastating these areas can help build consensus Effective institutions can provide long-term impacts on national and around environmental resources and conflict mitigation and prevention individual well being. In some sense, address other concerns facing neigh- mechanisms at different levels and conflict is pervasive and sometimes bors in the region. For these reasons, scales of conflict. Participatory de- necessary for change. Under the environmental cooperation and joint cision-making by all stakeholders right conditions, “bounded conflict” natural resources management can should promote solutions that diffuse can be a positive force for change. be a proactive conflict prevention or tensions and share benefits. Strength- To effectively manage conflicts and mitigation strategy. ening institutions at national, local, produce positive outcomes, however, and even international levels can also governments and communities re- help. Partnerships with international quire mechanisms and structures to Considerations NGOs can help implement programs resolve tensions, administer justice, for Planning and for conflict mitigation and manage- and build consensus strategies at the Implementation ment strategies. affected levels of society. Understand the Mechanisms of Cor- ruption. Since corruption can occur Integrate Livelihood Strategies. In- in multiple forms at several levels of terventions that broaden the range Conflict,E nvironment, society, developing good policy de- of alternative livelihoods, ensure fair and Pathways to Peace pends on understanding the sources, prices, and distribute benefits equi- Recent conflicts and resolutions show motivations, and impacts of corrup- tably to the poor should be part of that there are opportunities to focus tion in that society. long-term conflict prevention and on environmental problems as part Strengthen Enforcement. Many mitigation strategies. of a broader peacemaking effort. developing countries have sound Since environmental resources such Strengthen Resource Rights. Gov- NRM laws, but lack the political as river basins, forests, and protected ernment officials should clearly de- will or resources to enforce them. fine resource ownership, use, and ac-

Issues in Poverty Reduction and Natural Resource Management 37 cess rights to forests, land, and water. These resource tenure rules are pre- conditions for peaceful co-existence in resource-rich areas. Do No Harm. Governments and NGOs should integrate “conflict sensitivity” and contingency planning into conservation operations and make sure that their activities “do no harm.” This means that aid should not exacerbate or contribute to the sources of violence and weaken the opportunities for peaceful conflict resolution. Policy makers should be flexible in budgets and workplans for conflict-related programs and they should be able to respond to changing conditions and crises. n

Suggested Readings and References Barrett, Christopher et al. (Forthcoming.) “The Complex Links Between Governance and Biodiversity.” Conservation Biology. U.S. Agency for International Development (USAID). 2005a. Forests and Conflict: A Toolkit for Intervention. Washington, D.C.: USAID. U.S. Agency for International Development (USAID). 2005b. Livelihoods and Conflict: A Toolkit for Intervention. Washington, D.C.: USAID.

38 Section VII: Corruption and Conflict SECTION VIII: DISTRIBUTION OF ENVIRONMENTAL COSTS AND BENEFITS

Equity and Distribution of Environmental The equitable distribution of environmental Benefits costs and benefits is key to reducing poverty. The distribution of environmental costs and benefits (environmental distributions) is determined largely by government policies and practices, are reinvested in development initia- tribution policies contradict poverty including environmental regulations tives in the adjacent communities— reduction, environmental manage- (distribution policies). Environ- those most adversely affected by the ment, and other national objectives. mental distribution is a common parks. In Uganda, the park derivation Environmental distribution policies and powerful instrument used by recently rose from 12 to 20 percent are often enriching the political and governments around the world to to further encourage surrounding economic elite and ensuring that dis- create economic, political, and other communities to support conserva- proportionately large shares of envi- incentives to support various national tion. In India, the 25 percent share ronmental and other costs are passed objectives and public interests. of profits from wood sales to local on to the poor. communities has created incentives In Nigeria, the distribution of oil Some researchers claim that inequity for better forest management, and revenues is a constitutional matter. promotes economic growth because has reduced chronic violent conflict Following decades of violent conflict, profits are reinvested in new produc- between communities and the Indian including the Biafra separatist move- tive ventures to create income-gen- Forest Service. To strengthen the ne- ment, the federal government recent- erating opportunities, yet current gotiating positions of communities, ly increased the oil derivation—from development literature argues that including for derivation, NGOs are two percent to 13 percent—to the inequity retards growth when in- leading efforts to provide local peo- nine oil-producing states, principally come is reinvested abroad, consumed ples with the authority of free, prior, to reduce conflict. In Cameroon, as luxury goods, or used for politi- and informed consent (FPIC). provincial governments receive 40 cal patronage. Much of this litera- percent of the annual area tax col- Environmental justice is the fair dis- ture concludes that more equitable lected on forest concessions in their tribution of environmental costs and distribution of income and assets, jurisdiction, and another 10 percent benefits, but in many countries, poli- including environmental goods, can is passed on to the communities adja- cies that dictate the distribution of foster growth, whereas high inequity cent to the concessions. environmental benefits favor better- retards it. Thus, reducing inequities off regions and people. Typically as can benefit the poor by increasing Equitable distribution has also been resources gain value (usually through their assets and enabling their par- an incentive for sound environmental commercialization), the elite, some- ticipation in emerging economic op- management. In Kenya, 25 percent times with the government, benefit portunities while promoting overall of the entrance fees to national parks most. In many countries, current dis- economic growth.

Issues in Poverty Reduction and Natural Resource Management 39 In contrast, exclusion and inequal- to manage natural resources in a sus- Commercial Profits ity can lead to resentment, violent tainable way rather than disrupting The distribution of revenues/profits conflict, and separatist movements as the use of resources, for instance, by among sectors along a commodity has occurred in Angola, Indonesia, sabotaging oil and gas pipelines. chain from the source to the do- Nigeria, Sudan, and Zaire. Inequity mestic or international market has Environmental distribution is partic- linked with high poverty and author- significant impacts on poverty. The ularly effective for poverty reduction itarian regimes is particularly volatile. choice of local institutions is key to and natural resources management Without opportunities to share views devolving revenue-generating and when household and national econo- and influence public policy, people other authorities that have potential mies are dependent on resources. may turn to civil disobedience and implications for environmental man- Research shows that the poorer the other non-democratic means to make agement and poverty reduction. Pub- country, the more significant natural their opinions known. Ensuring fair lic policies contribute to determining capital is in determining the overall distribution of natural resources and the profit captured by the various distribution of wealth. In such na- benefits to remedy justice, especially actors. For many commodities, regu- tions, the rural poor are more depen- after a period of conflict, can relieve latory policies ensure that benefits dent on ecosystems than the urban tensions and allow for a more stable are concentrated and captured by the wealthy (although the wealthy tend society. In this way, distribution can elite. There is a need to increase the to use more resources per capita). be central to any peace-building or return on the poor’s natural resource With fewer options, the poor are reconstruction program and can be assets and enable them to capture more vulnerable to environmental undertaken in concert with democra- more profits as direct income. More degradation and the loss of access to tization efforts to ensure a more bal- equitable access to domestic and natural resources. Further, produc- anced distribution of power. global markets can go a long way tive land and high-value resources are toward increasing retention of local Increases in income and/or changes neither evenly distributed geographi- benefits. The key is opening profit- in asset distribution can reduce cally nor accessible to all citizens. In able activities to rural populations by poverty. Lacking access to services the absence of distribution policies, improving access to labor, processing, (infrastructure, markets, education) resource-rich regions and people and trade opportunities in the local and resources (finances, equipment, with access to productive lands may arena and higher up in the market- land), the poor cannot participate in prosper while those with no valuable ing chain. Further, increasing local or benefit from economic opportuni- resources or with access only to low- revenues from harvesting and sale of ties. While inequality is persistent, value resources remain in poverty. Of natural resources also increases local policies that are sensitive about dis- the three principle types of produc- government revenues by expanding tribution can greatly enhance poverty tive assets—natural, human/social, the tax base. reduction—especially for the poor- and physical—only existing stocks est. In high-inequity, high-poverty of natural capital can be distributed countries (most are in Africa and quickly and relatively easily, partly Public Revenues Latin America), research shows that because many natural resources are Inter-jurisdictional equity is the eq- equitable distributions can be more already “local.” Given the slow rates uity across districts within a nation, effective than economic growth alone of industrialization and persistent and intra-jurisdictional equity is the in reducing poverty. In these cases, weak manufacturing sectors in most equity across communities within the inequity effect on poverty is a developing countries, intensive use of levels of public administration below greater determinant of poverty than natural resources will likely continue the central government. Inter-juris- the growth effect. Even small distri- to drive economies for generations. dictional equity is often a function of butional changes can have a large ef- Ensuring that these resources are the willingness of the central state to fect on building the assets of the poor managed in a sustainable manner and engage in distribution among regions. and on reducing poverty. Increased that their benefits are fairly distrib- Intra-jurisdictional distribution is benefits can also create incentives uted is central to poverty reduction. considered a function of decentraliza- for citizens and local governments tion, but recent research concludes

40 Section VIII: Distribution of Environmental Costs and Benefits that responsiveness to the poor is a However, sometimes low-income Suggested Readings rare outcome. Local authorities are of- producers are disadvantaged by com- and References ten thought to be more effective than modity chains, especially if they lack Killick, T. 2002. Responding to Inequality. the central state at serving the poor, access to information, credit, insur- Inequality Briefing Paper No. 3. but evidence shows that this is often ance, competing buyers, and other Overseas Development Institute. not the case. Positive outcomes are factors. It is important to understand London. 6p. mainly associated with strong com- the distribution of benefits within McKay, A. 2002. Defining and Measuring mitments by national governments or the commodity chain and its pov- Inequality. Inequality Briefing. Overseas ruling parties to promote the interests erty impacts. Good tools exist for Development Institute. London. 6p. of the poor. The distribution criteria commodity chain analysis. It is also Naschold, F. 2002. Why Inequality (distribution through central govern- important to understand and plan Matters for Poverty. Inequality Briefing ment expenditures on public services, for the broader environment of the Paper No. 2. Overseas Development transfers to local authorities, disburse- chain—including ecological and gov- Institute. London. 6p. ments to citizens) used by central and ernance (political and social) impacts. Warner, K., M. Huang, and D. Middleton. local governments in allocating public Promote transparency and fairness 2004. Financial Incentives to Communities revenues from natural resources rarely in the allocation of public revenues for Stewardship of Environmental depends on whether they promote Resources: Feasibility study. Winrock generated from natural resources. poverty reduction and sound envi- International. Washington, D.C. 48p. Governments often directly or indi- ronmental management. FPIC is im- rectly generate significant revenues portant for promoting distributional from the exploitation of natural equity in countries that do not have resources. The way this revenue is fully consolidated democratic gover- reinvested has key poverty impacts. nance systems. Public administrations can often use support to optimize pro-poor im- Considerations pacts of public expenditures and to for Planning and make allocations in a transparent and Implementation fair manner. Focus on policies that impact dis- Strengthen multi-stakeholder nego- tribution as well as production/ tiation platforms and conflict man- productivity. Policies that increase agement. Natural resources, either production and productivity of through scarcity or through value, natural resource systems alone may often generate multiple interests and not be enough to reduce poverty. competition. It is useful to support These policies have to be targeted mechanisms that allow fair negotia- towards the poor and the assets of the tion of this multi-stakeholder interest poor—usually land, labor, and social and competition. To the extent possi- networks. In addition, the distribu- ble, these negotiations should include tion of assets and revenue is critical. all interested partners and the playing Policies that encourage a fair distribu- field should be leveled.n tion of productive assets and revenue can help stimulate growth as well as be pro-poor. Understand how natural resource commodity chains impact the poor. Linking producers to markets is a powerful poverty reduction tool.

Issues in Poverty Reduction and Natural Resource Management 41 Case Study: Namibia Wildlife Conservancies

ibia ocated in southwestern based conservancies. To qualify, m

Na Africa, Namibia is home to 32 communities were required to: species of large mammals, in- © USAID/ © LL • define the conservancy boundary cluding game species such as oryx, • elect a committee of springbok, kudu, warthog, buffalo, representatives and bushpig. Historically, wildlife populations have been owned and • negotiate a legal constitution controlled by the state. In 1968, as • Prove financial responsibility wildlife populations declined, the • Produce a plan for equitable Government of Namibia granted distribution of wildlife-related rights to commercial farmers to benefits manage and benefit from wildlife on their lands. The Living in a Finite Environment (LIFE) program, supported by the While wildlife populations on com- Torra Conservancy Namibian Ministry of Environment mercial lands increased, populations Community Game Guards and Tourism, USAID, and World fill in data sheets for on communal lands (42 percent of Wildlife Fund, helped communi- wildlife sightings as part of the land area in Namibia) contin- the conservancy’s wildlife ties establish conservancies, set up ued to decline. Local residents had monitoring program. sustainable management programs, little incentive to conserve wildlife, and facilitate the return of social particularly animals that threatened and economic benefits to these livestock and livelihoods. In the communities. 1980s, herds of springbok, zebra, and gemsbok consisted of fewer Between 1998 and 2004, legally than 1,000 animals each. In 1996, recognized conservancies rose in the Namibian government passed number from four to 31. Active legislation granting rights to com- conservancy members play a hands- munal farmers to manage wildlife on role in natural resources man- on their lands through community- agement. They collect and analyze wildlife population data, develop networks of citizen monitors, and participate in the decision-making

42 Section VIII: Distribution of Environmental Costs and Benefits process through formal meetings Figure 8: increase in wildlife populations in and established management mech- NAMIBIAN conservancies anisms. Results of this community- 1,600 1998 based approach to wildlife manage- 1,400 2004 ment include: 1,200 Increased wildlife populations. Between 1998 and 2004 popula- 1,000 tions of buffalo, springbok, kudu, 800 wildebeest, eland, gemsbok, warthog, ostrich, and red hartebeest NUMBERS 600 increased, sometimes dramatically. 400

New jobs. New jobs in the sport 200 hunting, ecotourism, guide services, 0 handicraft, and lodging industries Kudu Eland employed members of local com- Buffalo Ostrich Giraffe Springbok Gemsbok Warthog munities in 547 full-time and 3,250 Wildebeest SPECIES Red Hartebeest part-time positions. SOURCE: Adapted from WWF/LIFE Project. AMPR Update. 2005. Increased income. Total income from 18 conservancies grew from Figure 9: cbnrm spending versus contribution N$1.1 million in 1998 to N$14.1 to namibian net national income 140 million in 2004. Total Program Spending* Annual Asset Accumulation* 120 Community investment. Several Net National Income* *Adjusted to 2003. conservancies have used income 100 to build schools and water systems and establish training programs. 80

N$ MILLIONS 40

0 1991 1993 1995 1997 1999 2001 2003 YEAR

SOURCE: WWF/LIFE Project. AMPR Update. 2005.

Issues in Poverty Reduction and Natural Resource Management 43 Analytical Tools: Poverty Mapping Poverty maps are spatial representations of indicators • How does the location of poverty compare to the related to poverty and human well-being. Indicators distribution of ecosystem services? may be economic (per capita income, daily subsis- • Who has access to the resources, who benefits, who tence levels), social (child mortality, literacy, access bears the costs, and what are policy makers doing to health care), or environmental (distribution of to improve the situation? and access to natural resources). Poverty maps allow for comparison of indicators across sectors as well as A study conducted by WRI and UNEP/GRID- analysis based on administrative or ecological bound- Arendal that examines uses and impacts of poverty aries. In the NRM sector, poverty maps can be used maps in 14 countries. Highlights of the case studies to analyze the relationship between poverty and water include the use of poverty maps to implement national pollution, access to natural resources, natural hazards, and international poverty reduction strategies, improve and land tenure. Mapping efforts can help answer targeting of public expenditures, coordinate emergency program and planning questions such as: response and food aid programs, contribute to state- and local-level decision-making, and increase transpar- • Where are the poor? ency of public decision-making. The study is available • Which areas provide what amount of ecosystem at WRI’s Web site: http//www.wri.org. services?

44 Section VIII: Distribution of Environmental Costs and Benefits Section IX: Conclusion

oor people and poor countries tend to be dependent Natural resources must be recognized as a Pto a large extent on natural resources for growth, poverty reduc- major—if not the major—asset of the poor. tion, and empowerment. The relationship between natural resources management and poverty is complex importance of natural capital in the ity to participate in decision-mak- and dynamic. It is difficult to syn- economic portfolio of the poor, both ing processes often limit the poor’s thesize these relationships in a few economic growth and poverty reduc- ability to use natural resources in a paragraphs; what follows here are tion programs must focus on improv- sustainable manner to accumulate some general considerations to bet- ing the poor’s access to and use of wealth. Regardless of the resource or ter integrate natural resources and natural resources. form of tenure, rights over resources poverty reduction in development (including secure use rights and Focus on the Talents, Challenges, programs and strategies. property rights), especially land, are and Opportunities of Poor Rural often the most fundamental build- Recognize the Importance of Natu- Households. The portfolios of the ing blocks of prosperity for the poor. ral Resources for Poor Countries poor are dominated by human, so- Resource rights reform lies at the and Poor Households. Most poor cial, and natural capital. Pro-poor heart of pro-poor policies for those countries and most poor com- approaches focus on these assets and dependent on natural resources. Poli- munities are dependent on natural increase the poor’s return from labor, cies and programs should reflect that resources. Natural capital is a much institutions, and natural resources. tenure systems are complex, plural, greater share of wealth for the poor The asset-based approach starts and and dynamic. Currently, many poor than for the rich. Poor countries ends with poor households. Under- households lack formal titles to their generally have small service and in- standing what poor households need property, and for this reason, operate dustrial sectors and poor people have to succeed, how local institutions and their businesses outside the formal limited access to financial and pro- markets need to be restructured to economy. With little or no access duced capital. Thus, natural resourc- allow these households to participate, to the formal economy, the poor es must be recognized as a major—if and how policies and institutions lack contact to financial services and not the major—asset of the poor. can be used to adjust the incentives contractual mechanisms that would This understanding should be inte- in these markets are key questions allow them to exchange goods and grated into country strategies and that drive the design of asset-based obtain services in the expanded mar- programs, including through PRSPs, development. approaches to the MDGs, USAID ket. Hence, an integral component Mission strategies, decentralization Strengthen Pro-Poor Systems of Ac- of an effective poverty reduction policies, and other economic and cess to and Control Over Natural framework is to ensure that poor political instruments; governments, Assets. Both procedural and property households have entrée to expand- NGOs, and other institutions must rights are important for systems of ing economic opportunities through give careful consideration when de- control and access. Lack of control greater access to formal markets. This veloping such programs. Given the over available resources and inabil- contact will allow poor households

Issues in Poverty Reduction and Natural Resource Management 45 to make better use of their assets and reciprocity, and trust—which con- physical security through rural law receive improved economic returns tributes to growth and resilience and and order, and encourage new entry from their investments. Better formal is essential to the livelihood strategies to stimulate competition. recognition of the capital assets of the of most poor households. Protect and Enhance the Poor’s poor can contribute to this opening. Natural Resource Economic Struc- Return on Investments. In addition Further, systems of accountability, tures, Policies, and Institutions to protecting assets, steps need to be transparency, and democratic pro- Must Work for the Poor. Economic taken to enable poor households to cesses should be strengthened as well structures, policy, and institutions enhance the returns they earn from as the poor’s access to such systems. can negatively affect or bypass the assets they currently control and to Strong Local Organizations Are productivity and production of the acquire new assets. Pro-poor policies the Backbone of Pro-Poor Growth. poor. Equally important is that these and an effective institutional environ- Trade associations, producer and elements impact the distribution of ment are central to ensuring that the community groups, and effective benefits and costs, sometimes to the poor optimize returns on their assets. partnerships with businesses, NGOs, detriment of the poor. The poor need Pro-poor policies can range from and government groups can give better access to and control over the sound macroeconomic policies to in- low-income producers greater voice, mechanisms that translate natural centives for poor households to invest increased market knowledge, and im- resources into wealth. Programmatic in the education of their children. proved negotiating positions. Local interventions need to include a focus Build Resilience to Risk, Shocks, organizations also affect economies on redistribution and better alloca- and Vulnerability. Fostering resil- of scale in input supply and output tion of growth opportunities and ience, or reducing risk and vulner- marketing. Local communities re- outcomes. ability, is a relatively new concern in quire training, capacity-building, and Effective Policies Are Critical to poverty reduction programs. Shocks partnerships that provide or share Effective and Beneficial Natural are a critical component of poverty. management, marketing, and techni- Resources Management. Effective Building resilience to shocks and mit- cal skills. economic policies can increase the igating risk and vulnerability must Corruption and Conflict Signifi- productivity of assets by ensuring be part of any pro-poor intervention. cantly Impact the Poor. Since cor- access to functioning markets and The effectiveness of interventions ruption can occur in multiple forms investing in appropriate technologies. can be improved by diagnosing the at several levels of society, good poli- To strengthen pro-poor financial in- kind of shock, or trend, and applying cy depends on understanding sourc- stitutions, exclusionary mechanisms appropriate remedies. Shocks can be es, motivations, and impacts of cor- that prevent poor people from gain- rapid or slow onset; they can adverse- ruption in society. In addition, good ing access to credit, land rights, in- ly impact some individuals or whole laws and regulatory frameworks are surance, and social networks must be groups or regions. When individual often not enough—fair and transpar- identified and removed. Due to the households experience a shock, in- ent enforcement of existing laws and complex effects of markets and trade formal transfers and social support implementation of rules and regula- on poverty reduction, NRM pro- systems often provide important but tions is important. Conflict-sensitive grams should analyze specific market incomplete support. Public employ- development approaches also need to conditions and gain an understand- ment and conditional cash transfer be systematically considered for all ing of how market dynamics affect schemes offer valuable supplements. programs. both poor populations and natural Consider Various Options to Pro- capital. Interventions to strengthen An Asset-Based Framework for mote Resilience. There are many markets and reduce transaction costs Poverty Reduction Improves Social options to consider in an effort to can employ several options. To miti- Benefits. An asset-based framework promote the resilience of poor house- gate risks from thin markets, invest- for poverty reduction encourages the holds. Access to life and health insur- ment strategies should help reduce development and strengthening of ance, participation in pension funds, and stabilize transport costs, improve social capital—networks, systems of and access to secure savings instru-

46 Section IX: Conclusion ments are a few examples. Less direct ment as major incentives for resource measures, such as protecting access to intensification. Investments should common areas, may also be consid- be targeted to roads, agricultural ered. Such efforts enhance the secu- research, and education. Investment rity of poor households and reduce strategies should help reduce and sta- their vulnerability to external shocks. bilize transport costs, improve physi- With increased security and reduced cal security through rural law and vulnerability, poor households will order, and build the capacity of the have a stronger foundation for build- rural poor to integrate tomorrow’s ing a better future. economy and governance. n Access to Credit and Insurance Are Key to Individual Household Risk Management. With access to credit, households can access funds needed to rebuild lost assets, recover, and move onto a natural growth trajec- tory. In this context, policy makers should provide programs in microfinance, credit, insurance, and financial institution capacity. Focus on Less-Favored Areas in Development Programming. In- vestments in LFAs can have clear environmental and poverty reduction benefits, and in some cases the economic returns can equal or be higher than those earned in high-potential areas. It is important to recognize the differentiated nature of rural livelihoods, identify the most-limiting resource constraints and market limitations, and design a demand-led framework that considers different co-existing livelihood strategies. Such a framework—based on community-driven development—requires decentralization of authority and public finance. It is also important to facilitate the flow of remittances and their productive re-investment. Encourage Complementary Pro- poor Investments. Optimal portfolios will be a mix of public investments in infrastructure and technology development, access to assets, and engagement in off-farm employ-

Issues in Poverty Reduction and Natural Resource Management 47

Appendix A: Additional Suggested Readings and references

Barrett, Christopher et al. forthcoming. “The Complex Links Between Governance and Biodiversity.” Conservation Biology.

Bojö, J. et al. 2004. Environmental in Poverty Reduction Strategies and Poverty Reduction Support Credits. World Bank Environment Department Paper No. 102. Washington, DC: World Bank.

Cavendish, W. 2000. “Empirical Regularities in the Poverty-Environment Relationship of Rural Households: Evidence from Zimbabwe.” World Development 28(11):1979–2003.

Chemonics International. 2003. Community Forest Management in the Maya Biosphere Reserve: Close to Self-Sufficiency? Submitted to USAID. August.

Chemonics International. 2006. Forest Concessions: A Successful Model. BIOFOR Project Final Report. Submitted to USAID. March.

Department for International Development (DFID), Directorate General for Development, European Commission (EC), United Nations Development Programme (UNDP), The World Bank. 2002. Linking Poverty Reduction and Environmental Management: Policy Challenges and Opportunities. Washington, D.C.: The World Bank.

Food and Agriculture Organization of the United Nations (FAO). 2004. The State of Food and Agriculture 2003–2004: Agricultural Biotechnology—Meeting the Needs of the Poor? Rome, Italy: FAO.

Food and Agriculture Organization of the United Nations (FAO) and United Kingdom Department for International Development (DFID). 2002. Report of the Consultation on Integrating Small-Scale Fisheries in Poverty Reduction Planning in West Africa, Cotonou, November 12–14, 2002. Sustainable Fisheries Livelihoods Programme in West Africa SFLP/FR/15. Contonou, Benin: FAO and DFID.

International Fund for Agricultural Development (IFAD). 2001. Rural Poverty Report 2001. Rome: International Fund for Agricultural Development.

Molnar, Augusta, Sara J. Scherr, and Arvind Khare. 2004. Who Conserves the World’s Forests? Community-Driven Strategies to Protect Forests & Respect Rights. Washington, D.C.: Forest Trends.

Nelson, Michael et al. 1997. Report of the Study on CGIAR Research Priorities for Marginal Lands. Santiago, Chile: Consultative Group on International Agricultural Research, Technical Advisory Committee. Downloaded October 12, 2005: http://www.fao.org/Wairdocs/TAC/X5784E/x5784e00.htm#Contents

Newland, Kathleen. 2003. “Migration as a Factor in Development and Poverty Reduction.” Found in Migration Policy Institute. 2005. Migration Information Source: Selected readings on migration and development. Migration Policy Institute. Washington, D.C. p. 5–10

Issues in Poverty Reduction and Natural Resource Management A-1 O’Neil, Kevin. 2005. International Migration and Development: Linked, But How? Presentation for USAID Poverty Reduction and Natural Resources Management Seminar. Washington, D.C.: United States Agency for International Development. February 3.

Ratha, Dilip. 2004. “Understanding the Importance of Remittances.” In Migration Policy Institute. 2005. Migration Information Source: Selected readings on migration and development. Washington, D.C.: Migration Policy Institute.

Ruben, R., J. Pender, and A. Kuyvenhoven. 2004. Editorial: “Development Strategies for Less-Favoured Areas.” Food Policy 29: 295–302.

Scherr, Sara J. 2000. “A Downward Spiral? Research Evidence on the Relationship Between Poverty and Natural Resource Degradation.” Food Policy. Vol. 25, p. 479–498.

Seneca Creek Associates (SCA) and Wood Resources International (WRI). 2004. ‘Illegal’ Logging and Global Wood Markets: The Competitive Impacts on the US Wood Products Industry. Report by SCA and WRI for the American Forest and Paper Association, Washington, DC.

U.N. Millennium Project. 2005. Millennium Project. http://www.unmillenniumproject.org.

U.S. Agency for International Development (USAID). 2005. Promoting More Transparent and Accountable Government Institutions. http://www.usaid.gov/our_work/democracy_and_governance/gov.html.

Vedeld, Paul, Arild Angelsen, Espen Sjaastad, and Gertrude Kobugabe Berg. 2004. Counting on the Environment: Forest Incomes and the Rural Poor. Environment Department Paper No. 98. Washington, D.C.: World Bank.

World Bank. 2002. The Environment and the Millennium Development Goals. Washington, DC: World Bank.

Wunder, Sven. 2005. Payments for Environmental Services: Some Nuts and Bolts. CIFOR Occasional Paper No. 42. Jakarta, Indonesia: CIFOR.

A-2 Appendix A: Additional Suggested Readings and References Appendix B: List of presenters

Chris Barrett is International Professor of Applied Economics and Management in the Department of Applied Economics and Management at Cornell University.

Jan Bojö is an Advisor in the World Bank’s Office of the Vice President for Environmentally and Socially Sustainable Development.

Aaron Cosbey is an environmental economist specializing in the areas of trade and sustainable development, investment, climate change, and international environmental governance. He is Associate and Senior Advisor, Trade & Investment and Associate, Climate Change & Energy at the International Institute for Sustainable Development, Winnipeg.

Geoff Dabelko directs the Environmental Change and Security Project (ECSP), a nonpartisan policy forum on environment, population, and security issues located in Washington, D.C., at the Woodrow Wilson International Center for Scholars.

Gary Eilerts was a Peace Corps volunteer in Ivory Coast before receiving his Bachelor’s degree in Geography, and a Master’s degree in Regional Planning from the UCLA School of African Studies. In 2002, he joined USAID’s Office of Food for Peace as the FEWS NET Program Manager, and opened new FEWS NET activities in Afghanistan, Central America, and Haiti.

Norbert Henninger is Deputy Director of the World Resources Institute’s Global Information Program.

Nalin Kishor has worked on economic development and poverty reduction issues for more than 15 years, including more than 12 years at the World Bank.

John Lamb is an agricultural trade expert specializing in sector/sub-sector policy and strategies for value chain, supply chain, and cluster development, particularly for non-traditional export products. He is Principal Associate (Agribusiness) at Abt Associates Inc.

Ruth Meinzen-Dick is a Senior Research Fellow in the Division of Environment and Production Technology at the International Food Policy Research Institute.

Augusta Molnar is Director of the Community and Markets Program at Forest Trends.

Kevin O’Neil is an Associate Policy Analyst at the Migration Policy Institute (MPI), where he focuses on European Asylum and Migration Policy and on the North American Borders and Migration Agenda, as well as migration and economic development.

John Pender leads the International Food Policy Research Institute’s research program on policies for sustainable development of less-favored lands.

Issues in Poverty Reduction and Natural Resource Management B-1 C. Anthony Pryor is a Senior Manager at the International Resources Group, Ltd. (IRG).

Sara Scherr is an agricultural and natural resource economist specializing in land and forest management policy in tropical developing countries.

Miguel Schloss is a Managing Partner at DAMConsult, Ltd. in Washington D.C., where he works with strategic planning; policy, regulatory, and governance issues; quality assurance and internal control arrangements; financial and organizational structuring; and resource mobilization.

Dan Tunstall is Director for the Global Information Program at World Resources Institute.

Peter Veit is Regional Director for Africa in the Institutions and Governance Program at the World Resources Institute.

Andrew Warner is the Senior Economist at the Millennium Challenge Corporation, a new U.S. foreign assistance corporation established by an Act of Congress in January 2004.

Katherine “Kadi” Warner is the Managing Director of the Forestry & Natural Resource Management Unit at Winrock International, a nonprofit organization that works with people around the world to increase economic opportunity, sustain natural resources, and protect the environment.

B-2 Appendix B: List of Presenters

U.S. Agency for International Development 1300 Pennsylvania Avenue, NW Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524 www.usaid.gov