Slide1 : Poverty traps and their implication for the USAID Global Livestock CRSP
Chris Barrett
Cornell University
Different Perspectives on Poverty : Different Perspectives on Poverty The traditional, static, cross-sectional view:
Headcount and poverty gap (FGT) measures:
in US ~33 million below poverty line (11.7%)
in Kenya, it’s 44.1% and in Madagascar, 69.6%
The emerging, dynamic view:
Persistence measures:
in US only ~1/3 of poor remain poor for the whole year. Median poverty spell in US is only 4.5 months despite high poverty line ($18,104 for family of 4)
Vulnerability measures:
Estimated risk of falling below poverty line in future
Poverty traps: The dynamic view : Poverty traps: The dynamic view Poverty traps = Poverty spells that persist for long periods
- Foster hopelessness and insecurity
- Reproduce poverty intergenerationally (through child labor, education and undernutrition)
- Discourages investment
“Can’t get ahead for falling behind”
(Barrett and Carter, Choices 2001-2)
Poverty traps: A descriptive example : Poverty traps: A descriptive example Among the Poor in South Africa in 1998
(Carter & May, World Development 2001)
18% chronically poor, o/w 92% in poverty trap
25% fell behind, 1993-98, o/w 85% fell into trap
most of them suffered significant asset loss
Implication: ~38% of population and ~88% of those below poverty line are structurally poor
Transition probabilities in Côte d’Ivoire, 1993-95 : Transition probabilities in Côte d’Ivoire, 1993-95 The probability of being poor next year depends heavily on whether one is poor this year. Income mobility can be significant in the middle and upper ranges of the income distribution, but not much at the bottom.
Poverty traps and livelihood strategies in Rwanda : Poverty traps and livelihood strategies in Rwanda
Assets and poverty traps: An Ethiopian pastoralist example : Assets and poverty traps: An Ethiopian pastoralist example Among Ethiopian Boran, 17-year herd dynamics data suggest a poverty trap below 9-10 head/household with a high equilibrium of 35-55 head/household
(Lybbert et al. 2001)
Relief traps : Relief traps Poverty traps also give rise to relief traps for donors, who are trapped in humanitarian asssistance …
… while agricultural research funding declines : … while agricultural research funding declines
Attacking poverty traps is the right strategy, in ethical, economic and environmental terms : Attacking poverty traps is the right strategy, in ethical, economic and environmental terms
The causality of poverty traps and thematic implications for the GL CRSP : The causality of poverty traps and thematic implications for the GL CRSP Longitudinal, household-level data enables new, careful study of poverty dynamics and related “best bets” on how to deal with
Four key sources of poverty traps:
Risk exposure and limited risk management
Meager stocks of productive assets
Rudimentary production/processing technologies
Weak markets and nonmarket institutions
Risk exposure and limited risk management : Risk exposure and limited risk management 1) Reduce exposure to (asset, health, production and price) risk
2) Improve tools for managing risk
-ex ante through diversification opportunities, information systems, preventive health care and mobility
-ex post through formal and informal financial systems, curative health care systems and safety nets To facilitate exit from poverty traps, must learn how best to:
Meager stocks of productive assets : Meager stocks of productive assets 1) Build up stocks of natural capital
(land, livestock, soil quality) via
stock raising projects, nutrient
recycling, etc.
2) Build up human capital through
improved child nutrition and
education
3) Provide physical capital through
micro-equity finance, infrastructure,
etc. To facilitate exit from poverty traps, must learn how best to:
Rudimentary technologies : Rudimentary technologies Improve productivity of existing asset stock (improved genetics, disease management, integrated crop-livestock systems)
Identify and promote effective “transition technologies”
Finance to facilitate adoption of available technologies (case of SRI in Madagascar)
To facilitate exit from poverty traps, must learn how best to:
Weak markets and nonmarket institutions : Weak markets and nonmarket institutions Reduce fixed costs of market access
Reduce costs of and barriers to intermarket transport and storage
Implement competition policy in rural areas
Identify and support tenurial institutions that safeguard access to key natural resources
Foster group-based marketing, finance and innovation effectively To facilitate exit from poverty traps, must learn how best to:
Population implications for the GL CRSP : Population implications for the GL CRSP In order to address poverty traps effectively need to emphasize
chronically poor populations (e.g., pastoralists, forest dwellers)
East and Southern Africa; Central Asia (USAID Afghanistan strategy); Central America
In short, poorer livestock-dependent communities that suffer high rates of chronic vulnerability and that might otherwise miss out on the emerging “livestock revolution”
Through continued innovation and excellence in research that responds to pressing global needs, the GL CRSP can play a valuable role in addressing poverty traps around the world. : Through continued innovation and excellence in research that responds to pressing global needs, the GL CRSP can play a valuable role in addressing poverty traps around the world.