AN ECONOMIC ASSESSMENT OF THE POVERTY-ENVIRONMENTAL QUALITY NEXUS IN THE LAMBUSSIE- KARNI DISTRICT OF GHANA By Nakpa-Der Faalukuu Gordon (BA. Social Sciences) A Thesis Submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of MASTER OF ARTS (Economics) Faculty of Social Sciences College of Art and Social Sciences April, 2012 i DECLARATION I hereby declare that this submission is my own work towards the Master of Arts degree and that, to the best of my knowledge, it contains no materials previously published by another person nor material which has been accepted for the award of any other degree of the University, except where due acknowledgement has been made in the text. Nakpa-Der Faalukuu Gordon (20067120) …………………….. …………………...... Student Name and ID Signature Date Certified By: Mr. Jonathan .D. Quartey ………………………….. ……………………… Supervisor Signature Date ii DEDICATION This work is dedicated to my parents, Mr. Cuthbert Nakpa-Der and Madam Celine Be-ire and brothers and sisters for the foresight they had to send me to school. iii ACKNOWLEDGEMENTS This thesis was successfully completed through the support of many people and institutions. I would like to firstly thank the Almighty God for His divine blessing. My deepest gratitude also goes to my supervisor, Mr. Jonathan Dagadu Quartey, for his fatherly counsel and guidance. It was a pleasure and great experience to learn under him. He was always ready to listen and offer pieces of advice. To all the Lecturers of the Department, I appreciate all their efforts in helping in my training here. My appreciations too go Tropenbos International Ghana Ltd. for their financial support. This has indeed helped me in collection of household and economic data of the study site. Mr. Nketia and all the workers, I say God bless you abundantly. To my family members, I thank them so much for their prayers and support. I know a lot of sacrifices were made to enable me go through this programme, God will pay them back in many folds. To my best friends – Miss Evelyn Pala, Forster Appiah-Baah, Shadrach Kwakye Nimo, Richard Essilfie, I say God bless them for their encouragement and support. They urged me on to further my education. To my comrades, Ms Cordilia Kuupol, Paulinus, Stephen Dumeh, Agatha and Grace Kuunuu, Innocent Vire, Gyamera Amoako Steven, Felix Derzu, Gregory and Alpitio Seg-Ayellu, whose contributions and assistance have brought me this far, I say many thanks. Finally, to all those who in diverse ways have contributed to the success of my studies, I say thank you so much. iv ABSTRACT The poor in Ghana depend on the environment for their livelihood and survival and their lives are greatly affected by the way they use the environmental resources. This study aimed to examine the poverty-environment nexus in Lambussie-Karni District. The study puts the hypothesis of bi-directional link between poverty and environment to test. The results provide evidence in consonance with the dominant view in the literature that environmental degradation spurs rural poverty and vice versa thereby providing evidence in support of the poverty- environment nexus in the study area. Also results indicate that environmental degradation spurs rural poverty and vice versa. Furthermore it was found that the impact of poverty on environmental degradation was greater than the impact of environmental degradation on poverty. The results indicate that income levels of majority of the respondents were below the poverty line (US$1 per day), with the environment severely degraded. The livelihoods of the poor in the Lambussie-Karni District would be significantly enhanced by close integration of poverty-alleviation and environmental strategies aimed at reducing environmental problems. Also development of alternative sources of energy, intensification and modernization of environmental education are also essential to alleviate poverty in the district. v TABLE OF CONTENTS DECLARATION............................................................................................................................ ii DEDICATION ............................................................................................................... ………...iii ACKNOWLEDGRMENT ………………………………………………………………………iv ABSTRACT....................................................................................................................................v TABLE OF CONTENTS.............................................................................................................viii LIST OF TABLES..........................................................................................................................ix LIST OF FIGURES ........................................................................................................................x ABBREVIATIONS AND ACRONYMS USED......................................................................... xi CHAPTER ONE: INTRODUCTION....................... ……….........................................................1 1.1 Background to Study .................................................................................................................3 1.2 Problem Statement ....................................................................................................................6 1.3 Objectives of the Study..............................................................................................................7 1.4 Justification of the Study………………….……………………………………………..........8 1.5 The Study Area ……………………………………………………………………………….8 1.6 Method of Study ………….……………………………………………………………..……9 1.6.1 Population and Sample Size …………………………………….…………………….….. 11 1.6.2 Scope of the Study ….……………………………………………………..……….,……..12 1.6.3 The Research Hypotheses ....................................................................................................13 1.6.4 Data Collection …………………………………................................…………................13 1.6.4.1 Primary Data …………….................................................................................................13 1.6.4.2 Secondary Data ………………………………………………………………..………...13 1.6.5 Data Analysis …………………………………………………………………………...…14 1.7 Organization of the Study .......................................................................................................14 CHAPTER TWO: LITERATURE REVIEW ..............................................................................15 2.1 Theoretical Overview… ......................................................................................................... 16 2.2 Causality and Linkages of Poverty and Environmental Degradation .....................................21 2.3 Dasgupta,s Hypothesis of Poverty-Population-Environment…………………………..……22 2.4 Theoretical Model for Poverty-Environmental Quality Nexus …….……………………….23 2.5. Theoretical Consideration of Variables for Poverty-Environmental Quality Nexus ..…..… 24 2.5.1. Dependent Variables ……………………………………………………………………...25 2.5.2 Independent Variables .……………………………………………...…………………….28 2.6. Empirical Literature on Poverty ……..…………………………………..……………….....28 2.6.1 Rural Poverty and Rural Livelihoods …….........................................……………….……29 2.6.2 The Incidence of Poverty in Ghana..................................................................................... 32 2.6.3 Rural Poverty Reduction in Northern Ghana ……………………………………………..34 2.7 Empirical Literature on Environmental Degradation .…………...…………...……………..34 2.7.1 Causes of Environmental Degradation in Ghana .............................................................. 34 2.7.1.1 Fuel wood Harvesting and Uses ………………………………………………………. 36 2.7.1.2 Grazing ………………………………………………………………………………….37 2.7.1.3 Bush Fires ………………………………………………….……………………………38 2.7.2 Effects of Environmental Degradation in Ghana .........……………………………………38 2.7.2.1 Wood Scarcity …………………………………………………………………………..39 vi 2.7.2.2 Poor Crop Yield …………………………………………………..…………………….39 2.7.2.3 Poor Livestock Production …………………………………………….………………..40 2.8 Poverty-environment nexus ………………………………………...................................….42 CHAPTER THREE: METHODOLOGY ………………………………..…...............................43 3.0 Introduction…………………………………………….........................................................43 3.1 The Study Area...………….....................................................................................................44 3.2 Data Needs for the Study ………………………………………………………..………….44 3.3 Data Sources for the Study …………………. …………………………………………….. 45 3.3.1 Primary Data ………………………………………………………………………………46 3.3.2 Secondary Data … ……………………………………...................................................... 46 3.4 Data Collection Procedure …........................................................................................…..... 46 3.4.1 Sampling ……………………………… ………….............................................................48 3.4.2 Sample Size ……………………………………………………………………….……….49 3.4.3 Survey Instruments ………..................................................................................................49 3.4.4 Pilot Study …………………………………………………………………………………49 3.5 Data Analysis ……................................................................................................................. 50 3.6 Econometric Model Specification ……………………………………………………….…..52 3.7 Variables Definition …………………………………………………………………………55 CHAPTER FOUR: ANALYSIS AND DISCUSSION OF EMPIRICAL RESULTS…...........56 4.0 Introduction